profit is reward of risk taking
We know that whatever the business might be it includes risk . But more the risk taken in a business chances of profit earning in business is more . This can be explained by following daily life examples in which risk is more but at the same time earning profit is also more:
- A businessman who is doing the work of construction and he decided to construct an housing society ,then in that there is a chance that the money that he has invested to construct the housing society may go in loss if no one will purchase the house in that society . But if he advertise his project and if he has good reputation in the market then he will earn maximum profit.
- But if that same hosing society no one has purchased and then he decided to sell that society to other then he will get better amount of the land on which he has constructed his housing society and in this will be turn into profit for the businessman. But it includes risk that no one will interested to purchase that land.