2nd time posting the same questions to get better answers, Answer base on reading ...thanks How can the profit motive lead to income inequality? (Pages 33 – 35)pages 33Investment is necessary but risky. It has already been establishedthat capitalism is the most effective and efficient system for wealthcreation and economic prosperity. The path to economic successconsists in investment that is guided by supportive governmentpolicies and institutions. The success of capitalism, in turn, isderived from the success of business enterprises in their roles asjob creators and income-generating agents. However, investmentrequires enormous risk and sacrifice, along with one’s willingnessto undertake such risky ventures, which are based on the potentialreturns on the investment capital. A successful investor must notonly possess organizational and managerial skills, but he or shemust also be willing to take enormous risks. Tanner (2016) madethe point that one of the prerequisites for economic growth isto have individuals who are ambitious, skilled risk-takers andwho are ever striving for more in order to stimulate economicprosperity. When they are rewarded for their efforts, their skills,their ambitions, and their risks, greater inequality will be theresult. Freund (2016) argued that the emergence of extreme wealthfor individuals and companies is usually part of the structuraleconomic transformation that results in job creation and increasesworkers’ income. Creation of extreme wealth is part of economic Capitalism and InequalityA capitalist system cannot survive without investment, andpotential profit is the reward for investment spending. Therefore,without the likelihood of profits, there would be no investments.In fact, Utley (1967) agreed that profit making is an integral partof the market economy and it is an incentive for risk-taking and anecessity for wealth production.When speaking ofmatters relating to profit, it is very importantthat profit is defined. According to Investopedia (2017), profit is"a financial benefit that is realized when the amount of revenuegained from a business activity exceeds the expenses, costs, andtaxes needed to sustain the activity" (para. 1). Meanwhile, theEnglish Collins Dictionary (n.d.) defines profit motive as “theincentive or desire to work or establish a business to gain a profitor make financial gains." John Mackey and Raj Sisodia (2013)pointed out that profits are essential and a desirable outcome for abusiness. Indeed, it is socially irresponsible to run a business thatdoes not consistently generate profits. Profitable companies cangrow and contribute to fulfilling the higher purposes, and theirprofits fuel the growth and progress of our society. Through taxes,business profits help fund government and the many servicespeople rely on.Profit vs. LossAs Ludwig von Mises (1986) stated,Profits are the driving force of the market economy.The greater the profits, the better the needs of theconsumers are supplied. For profits can only be reapedby removing discrepancies between the demand ofthe consumers and the previous state of productionactivities. He who serves the public best, makesthe highest profits. In fighting profits governments35 development. "Wealth accrues to the creators of the largecompanies that move people out of agriculture and into modernproduction" (Freund 2016, 161).Huge risks include the loss of personal finance, borrowedcapital, and opportunity costs of all that must be forgone wheninvesting. More often, it may be necessary to operate at a lossfor many years before realizing some return on the investment.Remember, an entrepreneur's success is not guaranteed. In thebusiness world, the future is uncertain and entrepreneurs cannotaccurately predict the outcome of an investment. Situationsmay change during the investment that can lead to conditionsnot conducive to a business' success. For example, governmentregulations, market conditions, consumers' tastes, and competitioncan change. As an entrepreneur, one is at the mercy of thesechanging conditions.There must be an attractive incentive to cause individualsand companies to take the huge risks involving large sums ofborrowedmoney, personal life savings, and time, along with otherresources on their investments. There must be some perceivedmonetary reward and benefit. In fact, the expected benefits mustoutweigh the expected costs. This potential reward is called profit.Therefore, the profit motive (Collins English Dictionary, n.d.) is"of paramount importance in establishing a successful capitalistsystem." Bowles (2007) stated,The profit motive provides capitalism with theincentives for dynamism, a dynamism, whichallows (competitive) capitalism to allocate resourcesefficiently in the short run and to maximizegrowth in the long run. Both the market and theprofit motive the institution of property for theirsuccessful operation, an institution, which can bejustified morally and pragmatically. (51)34

The motive of profit is the intension of receiving monetary gains in a transaction. It is an…

How can the profit motive lead to income inequality? (Pages 33 – 35) pages 33 Investment is necessary but risky. It has already been established that capitalism is the most effective and efficient system for wealth creation and economic prosperity. The path to economic success consists in investment that is guided by supportive government policies and institutions. The success of capitalism, in turn, is derived from the success of business enterprises in their roles as job creators and income-generating agents. However, investment requires enormous risk and sacrifice, along with one’s willingness to undertake such risky ventures, which are based on the potential returns on the investment capital. A successful investor must not only possess organizational and managerial skills, but he or she must also be willing to take enormous risks. Tanner (2016) made the point that one of the prerequisites for economic growth is to have individuals who are ambitious, skilled risk-takers and who are ever striving for more in order to stimulate economic prosperity. When they are rewarded for their efforts, their skills, their ambitions, and their risks, greater inequality will be the result. Freund (2016) argued that the emergence of extreme wealth for individuals and companies is usually part of the structural economic transformation that results in job creation and increases workers’ income. Creation of extreme wealth is part of economic

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2nd time posting the same questions to get better answers,

Answer base on reading ...thanks

How can the profit motive lead to income inequality? (Pages 33 – 35)

pages 33

Investment is necessary but risky. It has already been established
that capitalism is the most effective and efficient system for wealth
creation and economic prosperity. The path to economic success
consists in investment that is guided by supportive government
policies and institutions. The success of capitalism, in turn, is
derived from the success of business enterprises in their roles as
job creators and income-generating agents. However, investment
requires enormous risk and sacrifice, along with one’s willingness
to undertake such risky ventures, which are based on the potential
returns on the investment capital. A successful investor must not
only possess organizational and managerial skills, but he or she
must also be willing to take enormous risks. Tanner (2016) made
the point that one of the prerequisites for economic growth is
to have individuals who are ambitious, skilled risk-takers and
who are ever striving for more in order to stimulate economic
prosperity. When they are rewarded for their efforts, their skills,
their ambitions, and their risks, greater inequality will be the
result. Freund (2016) argued that the emergence of extreme wealth
for individuals and companies is usually part of the structural
economic transformation that results in job creation and increases
workers’ income. Creation of extreme wealth is part of economic

Capitalism and Inequality
A capitalist system cannot survive without investment, and
potential profit is the reward for investment spending. Therefore,
without the likelihood of profits, there would be no investments.
In fact, Utley (1967) agreed that profit making is an integral part
of the market economy and it is an incentive for risk-taking and a
necessity for wealth production.
When speaking ofmatters relating to profit, it is very important
that profit is defined. According to Investopedia (2017), profit is
"a financial benefit that is realized when the amount of revenue
gained from a business activity exceeds the expenses, costs, and
taxes needed to sustain the activity" (para. 1). Meanwhile, the
English Collins Dictionary (n.d.) defines profit motive as “the
incentive or desire to work or establish a business to gain a profit
or make financial gains." John Mackey and Raj Sisodia (2013)
pointed out that profits are essential and a desirable outcome for a
business. Indeed, it is socially irresponsible to run a business that
does not consistently generate profits. Profitable companies can
grow and contribute to fulfilling the higher purposes, and their
profits fuel the growth and progress of our society. Through taxes,
business profits help fund government and the many services
people rely on.
Profit vs. Loss
As Ludwig von Mises (1986) stated,
Profits are the driving force of the market economy.
The greater the profits, the better the needs of the
consumers are supplied. For profits can only be reaped
by removing discrepancies between the demand of
the consumers and the previous state of production
activities. He who serves the public best, makes
the highest profits. In fighting profits governments
35

development. "Wealth accrues to the creators of the large
companies that move people out of agriculture and into modern
production" (Freund 2016, 161).
Huge risks include the loss of personal finance, borrowed
capital, and opportunity costs of all that must be forgone when
investing. More often, it may be necessary to operate at a loss
for many years before realizing some return on the investment.
Remember, an entrepreneur's success is not guaranteed. In the
business world, the future is uncertain and entrepreneurs cannot
accurately predict the outcome of an investment. Situations
may change during the investment that can lead to conditions
not conducive to a business' success. For example, government
regulations, market conditions, consumers' tastes, and competition
can change. As an entrepreneur, one is at the mercy of these
changing conditions.
There must be an attractive incentive to cause individuals
and companies to take the huge risks involving large sums of
borrowed
money, personal life savings, and time, along with other
resources on their investments. There must be some perceived
monetary reward and benefit. In fact, the expected benefits must
outweigh the expected costs. This potential reward is called profit.
Therefore, the profit motive (Collins English Dictionary, n.d.) is
"of paramount importance in establishing a successful capitalist
system." Bowles (2007) stated,
The profit motive provides capitalism with the
incentives for dynamism, a dynamism, which
allows (competitive) capitalism to allocate resources
efficiently in the short run and to maximize
growth in the long run. Both the market and the
profit motive the institution of property for their
successful operation, an institution, which can be
justified morally and pragmatically. (51)
34

Definition Definition Increase in the amount of goods and services produced by a country in a given period of time compared to an earlier period. Economic growth is generally coupled with a rise in national income or the purchasing power of individuals. It is often measured in terms of the increase in a country's gross domestic product (GDP), or the overall monetary value of all the complete or final services and goods that a country can produce within its domestic boundaries in a specific period.

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