Question

The profit motive is important to a market economy because it

Answer 1

encourages people to open businesses and invent new products

The profit motive drives people to risk opening new businesses and creating new products and services. Competition drives businesses to provide better products and services at lower prices. Should a business owner not provide a quality product, that owner risks losing customers to a competitor. In the real world, there are varying degrees of competition

Answer 2

Profit motive is a characteristic of free market economies, where the
sole intention of producers is to make profit. This results in both
positive and negative results. The importance of profit motive in a market economy is that all firms are established on its basis.