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A punch line (or punchline) is the final part of a joke, comedy sketch, or profound statement, usually the word, sentence or exchange of sentences which is intended to be funny or to provoke laughter or thought from listeners. Few punchlines are inherently funny out of context, but when a comedian sets up the premise and builds up the audience's expectations, the punch line can function as the climactic part of the act.
The origin of the term punchline is actually a mystery to etymologists. Some sources suggest the first published use of "punchline" or "punch line" to describe the pay-off line of a joke didn't appear until the 1920s or 1930s. Comedians had been using the classic "set-up, premise, punchline" format for many years before that time, however.
One theory is that the word punchline refers to the practice of emphasizing or "punching up" certain lines during a speech or monologue. Actors and broadcast journalists are trained to read their scripts with an ear towards high points and low points of audience interest. It is possible that the final line of a joke is called a punchline because the performer is expected to place stronger emphasis on it, or "punch it up" vocally.
Some believe the term is derived from one half of the medieval puppet team Punch and Judy. The modern punchline of a joke would be delivered in the same way that Punch delivered his slapstick blows on Judy. There is little convincing evidence to make such a connection, however, and the Punch and Judy plays did not rely on the same style of wordplay as traditional modern jokes.
In previous centuries, a joke was sometimes a "bite" or a "hit", in Italian it is still called a "battuta" (a "beating"). This concept of a "punch" as a term of humor was also encouraged by Punch, the magazine started in the late 1800's but very popular in the 1920's. Punch garnered it's name from Punch and Judy but later changed their logo to a punching glove. Many of their humor pieces were in the form of cartoons.
Avoiding the punch line 
Not all jokes have a punchline in a classic sense. Some comedic sketches simply end abruptly, or fade to black without a conclusion. Shaggy dog stories are long-winded anti-jokes where the punchline is deliberately anticlimactic, and are not intended to elicit laughter. Slapstick humor often relies more on an action and comical reaction instead of an actual punchline, but a pie in the face or pratfall can still work as a comical conclusion to a premise.
Monty Python moved away from punch lines as they found it increasingly hard to find good ways of rounding up humorous sketches. Terry Gilliam's animations and The Lumberjack Song were two of the many methods used to conclude sketches without punch lines.