Entrepreneurial Profit & Loss

The entrepreneurial profit/loss is the difference between the money units obtained by an entrepreneur in exchange for goods produced, and the money units surrendered by him in exchange for the factors of production used to produce these goods.

If this difference is positive it is referred to as an entrepreneurial profit. It occurs if the factors of production are withdrawn from occupations were they were from the consumers‘ point of view, directly or indirectly, fulfilling less urgent or fewer needs and instead occupied in lines of production where they fulfill more urgent or ample needs.

If this difference is negative it is referred to as an entrepreneurial loss. It occurs if the factors of production are withdrawn from occupations were they were from the consumers’ point of view, directly or indirectly, fulfilling more valued or ample needs and instead occupied in lines of production where they fulfill less urgent or ample needs.

Leave a Reply

Your email address will not be published. Required fields are marked *

 

Subscribe without commenting