No one starts a business expecting to lose money; however, the fact remains that ". . . one third of all new businesses fail to survive for two years and more than half fail to survive for four years . . . " (Page 95) "The hope for profits and the threat of losses is what forces a business owner in a capitalist economy to produce at the lowest cost and sell what the customers are most willing to pay for." (Page 120) It's this "threat of losses" that keeps even the immoral or amoral honest
Read chapter 6 of the text Basic Economics and watch the short video at the following link http://www.youtube.com/watch?v=xCPDQsEC0fI.
prepare no more than one page how the hope of profits and the threat of losses work together as incentives toward efficiency. Provide exs from personal experience in profits and losses if possible.