Option 1 -> Profit is the residual income left after all expenses are paid.
Option 2 -> Interest is the payment for borrowed capital, not a residual.
Option 3 -> Subsidies are government grants, not entrepreneurial earnings.
Option 4 -> Capital is the investment fund, not the leftover amount.
Hence, Option 1: Profit -> Profit is defined as the residual income that remains after deducting all costs of production including wages, rent, interest, and other expenses. The entrepreneur, being the risk-taker and organizer of production, appropriates whatever is left over as their reward. This residual nature distinguishes profit from other factor payments like wages, rent, or interest which are predetermined. -> correct