An incentive is something that changes the trade-offs people face, meaning it alters the costs and benefits of a decision. The other choices are related to the concept of marginal analysis, but they do not directly relate to the definition of an incentive.

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An Incentive Is

Question 95

Multiple Choice

An incentive is:

A) the marginal cost of engaging in a course of action.
B) the marginal benefit of engaging in a course of action.
C) something that changes the trade-offs people face.
D) rational behavior that involves thinking on the margin.

Correct Answer: