Final answer:
The statement is true as business activities are indeed distinguished from personal activities mainly by the pursuit of profits, which are paramount for the sustainability and success of a business.
Step-by-step explanation:
The statement 'Business activities are distinguished from personal activities in that business activities are motivated by the pursuit of profits' is True. Privately owned firms and individuals start businesses primarily to earn profits, which are the difference between total revenue and total costs.
While accounting profit only considers explicit (actual monetary) costs, economic profit takes into account both explicit and implicit (opportunity) costs.
Businesses, regardless of their size or complexity, strive to make a profit because it is the key indicator of their viability and success in the market. This profit serves as a reward for the entrepreneurs' investment of time, money, and resources into the venture.
When businesses fail to make a profit, they may cease to exist as their continued operation becomes unsustainable. Firms are not only compelled by the quest for profit but also operate within a framework of laws and regulatory constraints.
They may also abide by ethical codes that outline permissible actions, addressing issues like bribery, discrimination, and environmental responsibilities.