Question

What is the role of profit in international trade?Does profit replace or complement the regulatory function of pricing?

Answer 1

Profit plays a very important role in the international trade. Every company involve tries to make maximum profit from their trade. It acts as a motivational tool and acts as a catalyst in the international trade.

Yes the profit replace the regulatory function of pricing as the profit is the main agent for fixation of the price. The seller will decide the price depending on the profit he will earn . It depends on him , at which amount the consumer is ready to pay and thus he will kepp the profit margin accordingly.