What is 'Surplus of Revenue'?
What is the definition of 'surplus of revenue'? My textbook's explanation of revenue doesn't cover this.
For some context, here is a question from my textbook:
In the financial year 2008-2009, Liverpool Football Club announced a rise in operating profits to £8.5 millions.
This information necessarily means the Liverpool FC's
C (answer) - surplus of revenue over costs increased in 2008-2009
-
Given the context the term is not "surplus of revenue" it's "surplus of **revenue over costs**" or `revenue - costs > 0`. Secondly this question doesn't appear to be compliant with [FAQ](http://answers.onstartups.com/faq) and should be closed. – Karlson 12 years ago
-
I wasn't sure if this was compliant, so I indicated I wouldn't be annoyed at its closure. – Jakee 12 years ago
1 Answer
Simply, this is the amount over which a business is willing to accept for a product.
Put another way, if the market price is £10, but you are willing to accept a price of £5, because that covers your costs and gives you reasonable margin, your surplus of revenue is £5, as long as you charge £10. In this case you might only charge £8 or £9, just so you can price under market, and still have a surplus of revenue. The ideal is to maximise surplus of revenue, as that's money that's theoretically "on the table"
For more information check out:
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=producer+surplus
-
That makes sence - thank you MaddHacker. – Jakee 12 years ago
