R
= profitP = priceQ = quantity TC = total cost
K = capital stock
r = profit rate
g = growth rate
← a rate is a percentage
Y = income = PxQ
R = Y - TC
r = R/K
r = g × (1 - x
) / sc
← ratio of retained earnings to gross profit
(out of the profit, the firm keeps eg 0.5 to finance expansion)