Which of the following statements about negative incentives is the most accurate?
A) They increase benefits or reduce costs.
B) They increase benefits and increase costs
C) They decrease benefits or increase costs.
D) They include both cash subsidies and taxes.

Question

Quizplus · Accepted Answer

Negative incentives are designed to discourage certain actions or behaviors, typically by increasing the costs or reducing the benefits associated with those actions. This is why statement C, which states that negative incentives decrease benefits or increase costs, is the most accurate. While it is possible that negative incentives might also include cash subsidies or taxes (option D), this is not necessarily true of all negative incentives. Option B is incorrect because negative incentives do not increase benefits, as this would be counterproductive to their purpose. Option A is also incorrect as it does not account for the fact that negative incentives can be designed to increase costs, not just reduce them.

Which of the Following Statements About Negative Incentives Is the Most