Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 1 - Part I - Ten Principles of Economics - Questions for Review - Page 17: 4

Answer

incentives change the manner in which individuals act towards things, both great and awful. On the off chance that there are no impetuses, individuals won't have any desire to do anything. In the event that there are such a large number of motivations, an excessive number of individuals will attempt to do something very similar. The arrangements with respect to charges and such depend on motivating forces. On the off chance that policymakers can give great impetuses alongside an expansion in charges individuals will take to it superior to if there were no incentives.

Work Step by Step

An incentive is something that encourages an individual to act in a specific way. For example, when a price rises there is smaller incentive for a person to buy the good, and vice versa. This explains why policy makers carefully consider the price of their products - because it will have a direct flow on to the amount of the good that will be consumed.
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