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Motivation for Profit and loss

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Discuss about the role that profit and loss plays in a competitive market. Other than making the owners rich or poor, depending on if they make a profit or loss, what is the role that profit and loss plays?

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Why do we need profits, and why do we need losses?

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Solution Summary

This solution of 241 words discusses how profit is a motivation for firms to stay in business and discusses the requirement of losses.

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Profit is often the single most important objective of any business entity. We always say the objective of a firm is to maximize profit. In this sense we can say that profit is a motivation for firms to stay in business. This is good for the economy for few reasons. Among the the reasons are; they create jobs for public and they provide choices of ...

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