Management is valued at about two
cents per pound of bananas sold. The
value of the capital resources is almost
7¢ /lb., and the value of the land re
source is one cent per pound. There is
some risk involved in being an entrepre
neur, so a contingency factor is included
to compensate for the likely variability
in price and/or yield. The estimate used
here may be low, and for planning
purposes, an individual grower may wish
to increase it to reflect personal experi
ence. This entry can be interpreted as
saying that the preceding analysis of a
typical growing situation is a reasonable
estimate, but there is a good chance that
the price and/or yield could drop by 2%.
The total ownership costs per pound
therefore amount to about 11 1/2¢ /lb.,
consuming nearly the entire gross
margin and leaving only a half cent per
pound as the economic profit. However,
we must remember that an enterprise
which generates any economic profit at
all is "adequately profitable" in the
common sense of "profit." Recall that an
economic profit of at least zero means
paid and that all productive resources
(including "unpaid" labor) would have
received a return equal to their value.