10. Profits (and losses) result when the outcome of an investment project differs from that which was widely anticipated. Profit is a return to entrepreneurs who carry out economically beneficial projects that went unnoticed by others. This is not surprising, since the real world is characterized by imperfect knowledge. Losses accrue to entrepreneurs who mistakenly allocate resources to projects for which the opportunity cost exceeds the value of the good or service produced. When profits and losses bec;ome widely recognized, competitive forces generally eliminate them.