In a free enterprise system, businesses operate primarily with which objective?

• A. To serve community needs
• B. To maximize profits
• C. To create employment
• D. To minimize competition

Answer: (B)

In a free enterprise system, the primary objective of businesses is to maximize profits. This fundamental principle drives business decisions and strategies. Profit maximization encourages innovation, efficiency, and resource allocation, as businesses seek to provide goods and services that consumers value most. By focusing on profitability, companies compete in the marketplace, which leads to better products and services at lower prices for consumers.

The pursuit of profit also motivates entrepreneurs to take risks, invest capital, and develop new ideas. This entrepreneurial spirit is vital for economic growth and can lead to advancements in technology and improvements in living standards. Additionally, when businesses are profitable, they can reinvest in their operations, expand, and create jobs, benefitting the overall economy. Thus, while serving community needs and creating employment are important, they are often secondary outcomes of the primary goal of profit maximization in a free enterprise system.