Consider the following statements:
A.Consumers buy more MP3 players from an electronics store that sells MP3 players at a lower price than other rival electronics stores in the area.
B.Schools take steps to increase security since they believe it is more costly to allow vandalism than to hire additional security guards.
C.Citrus growers produce more oranges when the selling price of oranges falls.
Which of the above statements demonstrates that economic agents respond to incentives?
A)a only.
B)b only.
C)a and b.
D)a, b and c.

Question

Quizplus · Accepted Answer

All three statements demonstrate that economic agents respond to incentives. In statement A, consumers respond to the incentive of lower prices by purchasing more MP3 players from a particular electronics store. In statement B, schools respond to the incentive of reduced costs (from vandalism) by taking steps to increase security. In statement C, citrus growers respond to the incentive of higher profits by producing more oranges when the price falls.

Consider the Following Statements