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The answer is the third option.
Profit motive must be checked by competition if society is to benefit.
Free-market economists argue that the profit motive, coupled with competition, actually reduces the final price of an item for consumption, rather than raising it. They argue that businesses profit by selling a good at a lower price and at a greater volume than the competition. Economist Thomas Sowell uses supermarkets as an example to illustrate this point: “It has been estimated that a supermarket makes a clear profit of about a penny on a dollar of sales. If that sounds pretty skimpy, remember that it is collecting that penny on every dollar at several cash registers simultaneously and, in many cases, around the clock.
Sen, A. (1983). The profit motive. Lloyds Bank Review, 147(January).
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Jul 29th, 2015
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