Course Description

Module 5: What do Profit and Loss Tell Us?

Entrepreneurs attempt to direct resources to where they are most valued in society. This means producing goods and services that people want and need at a cost that people are willing to pay. Profit and loss both provide incentives for entrepreneurs to create value and communicate knowledge about the success (or failure) of their attempt to create value. In a market economy the function of profit and loss is to direct the allocation of resources to the most preferred uses of the people in society. This series of lessons explains the role of prices in providing both knowledge and incentives to entrepreneurs.

FEE Courses

Course curriculum

  • 1

    Module Five: What Do Profit and Loss Tell Us?

    • Overview

    • Additional Resources

    • Concepts and Terms

    • Objectives

  • 2

    Lesson One: Role of Prices

    • Introduction

    • What Do Prices "Know" That You Don't? by Learn Liberty

    • Watch Video

    • Think and Reflect

    • The Price System Part 1: Information by Dan Smith

    • Watch Video

    • Think and Reflect

    • Command Economy vs. Free Economy

    • Economics In One Lesson: How the Price System Works by Henry Hazlitt

    • Read Article: Ch. 15 Only

    • Lesson Quiz

    • Knowledge Recap

    • Bonus Material

  • 3

    Lesson Two: How Market Prices Emerge

    • Introduction

    • Read Article

    • Supply and Demand: Everything Has Its Price by Learn Liberty

    • Watch Video

    • Think and Reflect

    • A Market for Crude Oil

    • Lesson Quiz

    • Knowledge Recap

    • Bonus Material

  • 4

    Lesson Three: The Function of Profits

    • Introduction

    • The Price System Part 2: Profits & Losses by Dan Smith

    • Watch Video

    • Think and Reflect

    • Economics in One Lesson: The Function of Profits by Henry Hazlitt

    • Read Article: Ch. 21 Only

    • Think and Reflect

    • Letter to a Grandson by Mr. Kent

    • Read Article

    • Think and Reflect

    • Lesson Quiz

    • Knowledge Recap

    • Bonus Material

  • 5

    Lesson Four: The Importance of Loss

    • Introduction

    • The Economics of Errant Entrepreneurs by Israel Kirzner

    • Read Article

    • Think and Reflect

    • The Importance of Failure by Steven Horwitz

    • Read Article

    • Think and Reflect

    • Milton Friedman - GM Auto Bailout

    • Watch Video

    • Think and Reflect

    • Lesson Quiz

    • Knowledge Recap

    • Bonus Material

  • 6

    Lesson Five: Profits - A Measure of Public Service

    • Introduction

    • He Gains Most Who Serves Best by Paul Poirot

    • Read Article

    • Think and Reflect

    • People Before Profits by Walter Williams

    • Read Article

    • Think and Reflect

    • Coffee Shop Game

    • Think and Reflect

    • Lesson Quiz

    • Knowledge Recap

    • Bonus Material

    • Module 5 Badge