Entrepreneurs are specialists at taking on risks
They insure workers by buying their products (or their labor) for resale before consumers have indicated how much they are willing to pay for them
Workers receive an assured income (in the short run) while the entrepreneur bears the risk caused by price fluctuations in consumer markets
Risk v. uncertainty
Risk: recurring events whose relative frequency is known from past experience
Uncertainty: unique events whose probability can only be subjectively estimated
www.econlib.org/library/Enc/Entrepreneurship.html
| Previous slide | Next slide | Back to first slide | View graphic version |