Which of the following creates an incentive to increase the amount of an activity?

Question

Quizplus · Accepted Answer

An increase in the marginal benefit of an activity and a decrease in the marginal cost of an activity create an incentive to increase the amount of the activity. This is because it becomes more rewarding to do the activity and less costly to produce the activity, leading to an increase in the amount produced or consumed. Option A does the opposite by increasing the cost and decreasing the benefit, which reduces the incentive to engage in the activity. Option B suggests no change in incentive because there is no change in cost or benefit. Option D states none of the above create an incentive, which is inaccurate because option C does indeed create an incentive to increase the activity.

Which of the Following Creates an Incentive to Increase the Amount