I am looking for a citation. About thirty years ago while listening to the Public Radio, there was a discussion about a question for an examination to determine the understanding of economics in high school students. The question was something like “What is the purpose of profits in Neoclassical economics?” The answer was “to signal what to produce.” Are there any citations, which state something to the effect that profits signal production?
The statement seems to make intuitive sense. If a product is more profitable for a business, the profit will signal to the business that it should probably make more of it or a competitor will make more of it.