The fundamental objective of Joe and Joe's Gourmet Hamburgers, and other business firms and their owners, is to add value. More specifically, they want to add as much value as they can. Added value is the difference between the amount of money the firm receives from selling its product and the costs of all the inputs needed to make the product. Another name for added value is economic profit . The more economic profit Joe's Gourmet Hamburgers makes, the more money Joe gets.
Economists concentrate on resources rather than money.
Both accountants and economists count as costs the resources a firm buys. Economists also include the opportunity cost of the owner's equity capital as part of the cost of producing a product. For example, Joe used a large amount of his savings to buy the building and start up his restaurant. Joe's opportunity cost of his capital investment is the interest he would have received if he had kept the money in his savings account. Both accountants and economists figure profit as total revenue minus total cost.