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Wednesday, December 19, 2012

What is Economic Profit?

What is profit? Is it wrong to profit? Before answering that question, maybe we should start with a more mundane question: What do profits do? Or, how does the system work? In this exclusive FEE video, economist Frederic Sautet explains that profit guides entrepreneurs. If there is no profit (or loss), there is no guide.

Can this functional explanation of profit help us unpack the question of whether profit is wrong? We won’t settle that question today. But we do think one should have a good understanding how a profit and loss system actually works before moving to more philosophical questions. Check it out:

  • Frederic Sautet is an Associate Professor in the School of Business and Economics at The Catholic University of America in Washington, DC. He specializes in studying market processes and entrepreneurship. He is a member of the FEE Faculty Network.