GCSE Economics Practice Exam 2026 – The Comprehensive All-in-One Guide for Exam Success!

The formula used to calculate profit is Total Revenue minus Total Cost. This reflects the fundamental concept of profit in economics, where profit is defined as the excess of revenue gained from selling goods or services over the costs incurred in producing or providing those goods or services.

When total revenue, which is the total income generated from sales, is greater than total costs, which are all expenses related to production and operation, the result is a profit. Conversely, if total costs exceed total revenue, it results in a loss. Hence, the formula captures the essential relationship between revenue and costs, making it a cornerstone in business financial analysis.

In this context, the other options do not correctly represent the principle of profit calculation, as they either reverse the relationship or involve unnecessary addition rather than subtraction.