Explain how concern for profits shapes business decisions.

Businesses/companies will often compromise the quality of a product or service in order to make a profit. If a company uses cheap supplies to make a product, they will make more profit from it.

Here is an example:

Imagine you are making soap-making company. You use all organic ingredients which are very expensive. Let's say it takes $6 for you to make one bar of soap. If you sell your bars for $10, then you will make a $4 profit from each bar sold.

Now let's say another company starts making soap. It looks and feels almost exactly like yours. HOWEVER, this company uses artificial ingredients. It takes them only $3 to make a bar of soap, and they sell their soap on "sale" for $9. Not only will they likely sell more soap than you because their soap is cheaper, but they will make a $6 profit from each bar sold-- two more dollars per bar than you.

The same can be true the other way around of course. If a business realizes that nobody is buying their product because it is so poorly made, then they will improve the quality of their product in order to increase their sales.

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