Arrange the following theories of Profit in order of time when these were propounded from oldest to latest:

(A) Hawley's Risk Theory of Profit

(B) Walker's Theory of Profit: Profit as Rent of Ability

(C) Clerk's Dynamic Theory of Profit

(D) Schumpeter's Innovation Theory of Profit

(E) Knight's Theory of Profit

Choose the correct answer from the options given below:

Correct option is B

The correct chronological order of the theories of profit is:
1. (B) Walker's Theory of Profit: Profit as Rent of Ability (1876):
· Francis A. Walker proposed that profit is a reward for entrepreneurial ability, analogous to rent in land.
2. (C) Clerk's Dynamic Theory of Profit (1890s):
· John Bates Clark suggested that profit arises in a dynamic economy due to changes like technological advancements or capital accumulation.
3. (A) Hawley's Risk Theory of Profit (1907):
· F. B. Hawley argued that profit is the reward for the risk undertaken by entrepreneurs.
4. (D) Schumpeter's Innovation Theory of Profit (1911):
· Joseph Schumpeter posited that profit results from innovations introduced by entrepreneurs, creating temporary monopolies.
5. (E) Knight's Theory of Profit (1921):
· Frank H. Knight differentiated between risk and uncertainty, stating that profit is the reward for bearing non-measurable uncertainties.
Information Booster:
Key Profit Theories:
· Walker’s Theory (1876): Profit as a reward for entrepreneurial ability.
· Clerk’s Dynamic Theory: Profit arises due to economic dynamism (change).
· Hawley’s Risk Theory: Profit compensates entrepreneurs for taking risks.
· Schumpeter’s Innovation Theory: Innovation as the primary source of profit.
· Knight’s Theory: Profit arises from non-quantifiable uncertainty.
Additional Knowledge:
· Risk vs. Uncertainty:
· Risk: Measurable likelihood of outcomes.
· Uncertainty: Non-measurable and unpredictable outcomes, central to Knight's theory