Which of the following best describes how a typical business operates to generate profit and attract customers?

• A. A business generates profit by minimizing production and avoiding any form of marketing to reduce expenses.
• B. A business only provides free goods and relies solely on donations for revenue, without any marketing efforts.
• C. A business makes money by setting prices below its costs and focusing exclusively on word-of-mouth marketing.
• D. A business produces goods or services, sells them at a price higher than its costs, and uses marketing strategies such as advertising and promotions to increase sales.

Answer: (D)

Verified step by step guidance

1. Understand the fundamental goal of a business, which is to generate profit by producing goods or services that customers value.
2. Recognize that profit is made when the selling price of a good or service exceeds the cost of producing it. This means the business must set prices above its costs.
3. Acknowledge the role of marketing strategies, such as advertising and promotions, which help attract customers and increase sales volume.
4. Evaluate the options by comparing them to these principles: minimizing production or avoiding marketing typically reduces sales and profit; giving away goods for free or pricing below cost is unsustainable without other revenue sources.
5. Conclude that the best description is the one where the business produces goods or services, sells them at a price higher than costs, and uses marketing to boost sales.