Consider the following statements:
a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.
b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
c. Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives?
A) a only
B) b only
C) c only
D) a and b
E) a, b, and c

Question

Consider the following statements:
a.	Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area.
b.	Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment.
c.	Firms produce more of a particular DVD when its selling price rises.
Which of the above statements demonstrates that economic agents respond to incentives? 
A) a only
B) b only
C) c only
D) a and b
E) a, b, and c

Quizplus · Accepted Answer

All statements demonstrate that economic agents respond to incentives: a) consumers buy more when prices are lower, b) banks weigh costs and benefits of security measures, and c) firms increase production when prices rise.

Consider the Following Statements