Profit motive

In economics, the profit motive is the motivation of firms that operate so as to maximize their profits. Mainstream microeconomic theory posits that the ultimate goal of a business is "to make money" - not in the sense of increasing the firm's stock of means of payment (which is usually kept to a necessary minimum because means of payment incur costs, i.e. interest or foregone yields), but in the sense of "increasing net worth". Stated differently, the reason for a business's existence is to turn a profit.[1] The profit motive is a key tenet of rational choice theory, or the theory that economic agents tend to pursue what is in their own best interests. In accordance with this doctrine, businesses seek to benefit themselves and/or their shareholders by maximizing profits.

As it extends beyond economics into ideology, the profit motive has been a major matter of contention.

  1. ^ Compare: Duska, Ronald F. (1997). "The Why's of Business Revisited". Contemporary Reflections on Business Ethics. Issues in Business Ethics. Vol. 23. Dordrecht: Springer Science & Business Media (published 2007). p. 41. ISBN 9781402049842. Retrieved 8 July 2019. In microeconomics courses, profit maximization is frequently given as the goal of the firm. [...] In microeconomics, profit maximization functions largely as a theoretical goal, with economists using it to prove how firms behave rationally to increase profit. Unfortunately, it ignores many real-world complexities.

© MMXXIII Rich X Search. We shall prevail. All rights reserved. Rich X Search