B) Answer the following questions.

1. Do you agree that business transaction is an economic transaction? Justify your answer

with TWO reasons.

Yes, agree, business transactions are economic transactions. Two reasons why:

Profit motive: economic transactions have a profit motive: they are carried out and agreed upon between the two parties, because the parties feel that they will be better off after the transaction is completed. Business transactions are based on the profit motive. Things of value: goods and/or services, are exchanged between the parties. In business transactions, either a good (for example, an asset), or a service (for example, employees), is always exchanged.