ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Private property, freedom, self-interest, competition, minimum government intervention are the characteristics of a market economy. A market economy is governed by supply and demand.

Detailed explanation-2: -The profit motive refers to an individual’s drive to undertake activities that will yield net economic gain. Because of the profit motive, people are induced to invent, innovate, and take risks that they may not otherwise pursue.

Detailed explanation-3: -Profit is the financial gain received by selling something for more than it cost to make it. Producers are motivated by the profits they expect to gain from the goods or services they offer. Their incentive to produce-the thing that motivates them-is the idea that consumers will want or need what they are offering.

Detailed explanation-4: -Healthy market competition is fundamental to a well-functioning U.S. economy. Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.