What are the rewards for business people who take the risk involved in offering goods and services to customers?

Study for the UofT MGT100 Fundamentals of Management Exam. Practice with quizzes and detailed study materials to excel. Prepare with clear explanations and valuable tips to ace your exam!

Business people who take the risk involved in offering goods and services to customers are primarily rewarded with profits. Profits represent the financial gain that exceeds the costs of conducting business, which includes expenses related to production, marketing, and distribution. When a business successfully meets customer demands and effectively manages its operations, the result is often a profit—the ultimate incentive for entrepreneurs and investors.

This concept aligns with the foundational principles of entrepreneurship, where taking risks is inherent in launching and maintaining a business. The potential for profit acts as a motivating factor for individuals to invest their time, resources, and capital into creating products or services that fulfill market needs.

Other options, while related to financial performance, do not capture this specific element of risk and reward in the same way. Returns and gains refer to broader outcomes that can encompass profits but also can be less specific or include non-financial measures. Revenue refers to the total income generated from sales before any costs are deducted and does not account for the profits realized after expenses are taken into consideration. Thus, profits accurately depict the reward that results from balancing risk and successful business operations.

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