8. Concluding Remarks

The famous economist Knut Wicksell defined economics as a practical science. Viewing the business world around us, we can see that modern market economies are comprised of a for-profit or business sector and a nonprofit sector. Practitioners in the business sector make investment and production decisions based on the fundamentals of expected and realized profit rate, profit margin, and total profit. In this book we presented a practitioner model of the firm in the sense that the model is derived from the definitions of profit rate and profit margin, which are well-known concepts among business people. With these concepts in hand, we defined output as the product of the profit rate and the market value of capital stock divided by profit margin. Similarly, capital stock was defined as the product of output and profit margin divided by profit rate.