Answer Expert Verified The desire to make a profit motivates individuals and businesses to work efficiently. Along with this, lowering the cost of production allows business to decrease the price of goods, making the it more likely that consumers will buy it.
Which describes the system in a free market economy?
The free market is an economic system based on supply and demand with little or no government control. Free markets are characterized by a spontaneous and decentralized order of arrangements through which individuals make economic decisions.
Which of the following is the reason why in a free market society the government passes laws?
The reason is to protect freedom of choice.
What can be done by the government in a command economy?
In a command economy, the government controls major aspects of economic production. The government decides the means of production and owns the industries that produce goods and services for the public. The government prices and produces goods and services that it thinks benefits the people.
Which statement best explains the profit motive?
The correct answer would be, The desire to make money through goods and services. Explanation: Profit motive is the motivation to earn profit. In economics, the core motivation of an organization is to earn money.
Which describes a system in a free market economy?
Which best explains how free choice is protected?
Which best explains how free choice is protected in a free-market system? – Consumers and producers protect their own freedom by making economic decisions. – The government makes and enforces whatever laws are needed to guarantee free choice.
Why is profit motive important?
In theory, the profit motive helps everyone from individuals to corporations decide what to do at a particular time. Looking at profit, or the potential for profit, simplifies many decisions.
Is profit a good motivation for business?
Profit is the basic motivation for any business, but it has to be tempered with humanity, respect and ethics. There’s a real danger for allowing businesses to run purely based on the idea that more is better.
What is your concept of reasonable profit?
The firms may differ on ‘how much profit’ but they set a profit target for themselves. Some firms set their objective at a ‘standard profit’, some at a ‘target profit’ and some at a ‘reasonable profit’. ‘A reasonable profit’ is the most common objective.
Why does the profit motive lead to efficiency?
Individuals need to own resources in order to make free choices. Which best explains why the profit motive often leads to efficiency and innovation? The competition to make profit drives producers to eliminate waste.
Can a government be efficient without a profit motive?
Government can be efficient without a profit motive. Profit motive is aligning your services where you can make the most money. Private industry must do this to stay in business. Efficiency is using your existing resources to the maximum extent.
When do you need to prove profit motive?
For taxpayers who participate in rental activities, for example, profit motive must be determined in order to claim rental expenses. The IRS may try to prevent a taxpayer from claiming rental losses if a profit motive cannot be proved.
What makes a hobby not a profit motive?
Profit motive is also what separates a hobby from a business in the eyes of the IRS— losses from a hobby are non-deductible because there is no intent to make real economic profit. Since hobbies are activities participated in for self-gratification, losses incurred from engaging in them cannot be used to offset other income.
