income

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The economic revenue that an individual or business receives for the sale of their products or services, as well as the rest of the types of income that are obtained. Personal income is the economic retribution earned in exchange for work.

In the business field, income represents one of the most important variables since they form the base over which expenditures are subtracted to give profits or losses. 

Income is formed by two parts:

• The amount of goods and services that are sold or their value to be collected.
• The economic value of each unit (unit price).

This means that income only goes up when the quantity sold increases or the unit price increases.

The following terms are the generalised terms that describe income in the business world which are also related to other business variables:

• Average income: the average that is calculated for each unit that is sold. Total income is divided by the total number of units sold.
• Marginal income: also known as contribution income, equals unit price minus unit variable cost or, in a general sense, equals total sales minus total variable costs.
• Marginal revenue (income) product: also known as MRP, comes from an increase in one of the production factors such as land, human capital or time.