Business Jargons

Definition: Demand Forecasting refers to the process of predicting the future demand for the firm’s product. In other words, demand forecasting is comprised of a series of steps that involves the anticipation of demand for a product in future under both controllable and non-controllable factors. The business world is characterized by risk and uncertainty, and most of the … [Read more...] about Demand Forecasting

Definition: The Market Demand is defined as the sum of individual demands for a product per unit of time, at a given price. Simply, the total quantity of a commodity demanded by all the buyers/individuals at a given price, other things remaining same is called the market demand. There are several factors that determine the demand for a product. These are: Price of … [Read more...] about Determinants of Market Demand

Definition: The total quantity that all the individuals are willing to and are able to buy at a given price, other things remaining the same is called as Market Demand. In other words, Market Demand refers to the sum of individual demands for a product at a given price per unit of time. What is Individual Demand? Individual demand refers to the quantity of a commodity … [Read more...] about Market Demand

Definition: Another source of a pure profit (over and above the normal profit) is said to be a Monopoly, characterized by a single seller without any close substitute. Monopoly Theory of Profit posit that the firms enjoying the monopoly power restricts the output and charge higher prices for its products and services, than under perfect completion. So far, all the theories … [Read more...] about Monopoly Theory of Profit

Definition: The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur can earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance. … [Read more...] about Schumpeter’s Innovation Theory of Profit

Definition: The Knight’s Theory of Profit was proposed by Frank. H. Knight, who believed profit as a reward for uncertainty-bearing, not to risk bearing. Simply, profit is the residual return to the entrepreneur for bearing the uncertainty in business. Knight had made a clear distinction between the risk and uncertainty. The risk can be classified as a calculable and … [Read more...] about Knight’s Theory of Profit

Definition: Hawley’s Risk Theory of Profit was propounded by F.B. Hawley, who believed that those who have the risk taking ability in the dynamic production have a sound claim on the reward, called as profit. Simply, profit is the price that society pays to assume the business risk. The risk in business may arise due to several factors, Viz. Obsolescence of a product, … [Read more...] about Hawley’s Risk Theory of Profit

Definition: Clark’s Dynamic Theory of Profit was propounded by J.B. Clark, who believed that profits arise in the dynamic economy and not in the static economy. The static economy is one in which the things do not change significantly or remains unchanged. Such as, the population and capital remain stationary, goods continue to be homogeneous, production process remains … [Read more...] about Clark’s Dynamic Theory of Profit

Definition: Walker’s Theory of Profit, also called as a Rent Theory of profit was propounded by F.A. Walker, who believed that profit is regarded as a rent of differential ability that an entrepreneur may possess over the others. Walker’s theory of profit works on the same principle as that of land rent, which is the difference between the yields of least and most effective … [Read more...] about Walker’s Theory of Profit

Definition: Profit is the financial benefit realized from the business activity when the revenues generated exceeds the costs and expenses incurred in the operation of such activities. Simply, the total cost deducted from total revenue yields profit. The profits of the organization depend on the successful management of business operations, i.e. how well an entrepreneur … [Read more...] about Theories of Profit