ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Because of the profit motive, people are induced to invent, innovate, and take risks that they may not otherwise pursue.

Detailed explanation-2: -Profit is an important incentive that leads entrepreneurs to accept the risks of business failure. Entrepreneurs are individuals what are willing to take risks in order to develop new products and start new businesses.

Detailed explanation-3: -Provision of Government incentives like availability of power, concessional finance, capital investment subsidies, transport subsidies, etc. aims at eliminating such constraints and promote entrepreneurship.

Detailed explanation-4: -Entrepreneurs face multiple risks such as bankruptcy, financial risk, competitive risks, environmental risks, reputational risks, and political and economic risks. Entrepreneurs must plan wisely in terms of budgeting and show investors that they are considering risks by creating a realistic business plan.

Detailed explanation-5: -Generally speaking, entrepreneurs take risks as it allows them to distinguish themselves from their competitors. In the competitive business environment that exists today, those who are willing to position themselves as risk-takers position themselves as leaders as well, while others get left behind.