Question

State the Dynamic Theory of Profit.

Answer 1

• J.B. Clark propounded this theory in 1900. To him, profit is the difference between price and cost of production of the commodity.
• Profit is the reward for dynamic changes in society. He points out that, profit cannot arise in a static society. In a static society, everything remains stationary.
• The following changes take place in a dynamic society.
  1. The population is increasing.
  2. The volume of capital is increasing.
  3. Methods of production are improving.
  4. Forms of the industrial organization are changing.
  5. The wants of consumers are multiplying.