what is profit where do profits come from Essay

ECOP1001 Economics as a Social Science Essay The essay should compare Two different schools of economic thoughts Question 4. What is profit? Where do profits come from? Economic theories simplify the relations among key economic concepts and enable us to understand different economic concepts. Throughout history, different economists in different time periods have formed diverse thoughts on how markets work by building and improving on the work of those who came before them. Therefore in order to gain a wider understanding of a particular economic term, it is helpful for us to investigate more than one economic theory. This essay will explore classical and Marxist and compare their portrayal of the concept of profit and where is it†¦show more content†¦Lastly, exchange value is also related to the product’s natural price (Stilwell, 2012). These three factors together determine the price of what workers produce and the total revenue that capitalists receive. Karl Marx is known as one of â€Å"the most controversial figure in the history of political economy (Stilwell, 2012, p.99).† The concept of profit in a Marxist economy is expressed as the surplus value of the amount paid to workers compared to what the commodity they produce is actually worth. Marx used a graph to explain this concept further: he divided the working day into two parts (A to B and B to C) (Stilwell, 2012). A to B is the part where workers work in order to cover the wage paid by the capitalists (Stilwell, 2012). From B to C, that part of the production is the surplus value exploited by the capitalists and therefore, the higher the B to C, the higher the profit would be (Stilwell, 2012). There are several ways to achieve this. First of all, employers can extend the part of the working day that lies between B and C on the aforementioned graph. This could involve reducing total pay (effectively shortening the time between A and B), or simply increasing the number of hours worked per day. These methods inherently have physical and mental (and arguably moral) limitations, which Marx addresses in his exploitation theory. An alternative method for increasing profits is to restructure the work, for example throughShow MoreRelatedEssay MKT 220 Module 4 Homework Assignment1496 Words   |  6 PagesASSIGNMENT taught by PROFESSOR K December 1st, PART I: Read Pay What It’s Worth. Would this concept work in an upscale restaurant? Why or why not? I must admit that upon reading the article, â€Å"The Customer Experience: Pay What It’s Worth,† my jaw dropped to the floor. I read it again and still had a hard time processing it. 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It is extremely useful in determining past performance and to try and predict future results. It enables a business to see what changes could make to improve on its profit. It also give enough information to help a business to set targets. We can learn more from the statement