How Do Principles Textbooks Treat the Return to Entrepreneurship? The Missing Factor

Principles textbooks have improved in incorporating entrepreneurship in theory. However, they still generally lack simple demonstrations of the entrepreneurial input, particularly when teaching the theory of a normal rate of return. Many texts are unclear over the definition of a normal return and its constituent parts. Our paper (1) reviews the theory of the entrepreneurial input; (2) sorts how popular textbooks calculate a normal rate of return consistent with their definition of the entrepreneurial input; and (3) provides a simple numerical example that incorporates the entrepreneurial input, which can be more fully developed in intermediate texts.