Explain the distinction economists often by Dr. Robert Murphy @Mises

Question 84 / 96: Explain the distinction economists often make between interest and profit.

Answer:

Gross or accounting profit is total revenue minus out-of-pocket

expenditures. However, this calculation ignores the interest on the

invested capital. Even if a business venture "makes money," if the

investor could have ended up with even more money through a

different (and equally safe) investment, then in a sense the investor

actually suffered a loss.

Sample Partial Credit Answer

Profit can mislead if it doesn't include interest.

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https://www.jobilize.com/capitalism-the-market-economy-by-dr-robert-murphy-mises

Capitalism: The Market Economy

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Dr.Robert MurphyAssociated Scholar

Mises Institute

USA

Attribution: Dr. Robert P. Murphy, Lessons for the Young Economist. (Mises Institute), http://mises.org/document/6215/Lessons-for-the-Young-Economist (Accessed 04 April, 2014). License: Creative Commons BY

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