Write a note on Risk-bearing Theory of Profit?

1.	Write a note on Risk-bearing Theory of Profit?
Answer» 1. Risk bearing theory of profit was propounded by the American economist F.B. Hawley in 1907. 2. According to him, profit is the reward of “ risk taking” in business. 3. Risk taking is an essential function of the entrepreneur and is the basis of profits. 4. It is a well know fact that every business involves some risks. 5. Since the entrepreneur undertakes the risks, he receives profit. 6. If the entrepreneur does not receive the reward, he will not be prepared to undertake the risks. 7. Every entrepreneur products goods in anticipation of demand. 8. It is the profit that induces the entrepreneurs to undertake such risks.

Answer»

1. Risk bearing theory of profit was propounded by the American economist F.B. Hawley in 1907.

2. According to him, profit is the reward of “ risk taking” in business.

3. Risk taking is an essential function of the entrepreneur and is the basis of profits.

4. It is a well know fact that every business involves some risks.

5. Since the entrepreneur undertakes the risks, he receives profit.

6. If the entrepreneur does not receive the reward, he will not be prepared to undertake the risks.

7. Every entrepreneur products goods in anticipation of demand.

8. It is the profit that induces the entrepreneurs to undertake such risks.

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