Final answer:
The profit motive refers to the desire and incentive of individuals and businesses to make a profit by producing and selling goods and services. It drives businesses to innovate, compete, and strive for efficiency in order to maximize profits. The profit motive is important because it encourages entrepreneurship, economic growth, and job creation.
Step-by-step explanation:
The profit motive is a key principle of the US economic system of free enterprise. It refers to the desire and incentive of individuals and businesses to make a profit by producing and selling goods and services. Profit is the difference between revenues (the money generated from sales) and costs (the expenses incurred in producing the goods or providing the services).
For example, let's say a company sells a product for $10 and it costs $7 to produce. The profit would be $3. The profit motive drives businesses to innovate, compete, and strive for efficiency in order to maximize their profits.
The profit motive is important because it incentivizes individuals and businesses to take risks, invest capital, and create new jobs. It encourages entrepreneurship and economic growth. However, it is important to note that businesses must also operate within legal and ethical boundaries to ensure fairness and protect consumers.