Consider the following statements:
a.Car owners purchase more petrol from a petrol station that sells petrol at a lower price than other rival petrol 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)b only
B)c only
C)a and b
D)a, b, and c

Question

Consider the following statements: 
a.Car owners purchase more petrol from a petrol station that sells petrol at a lower price than other rival petrol 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)b only
B)c only
C)a and b
D)a, b, and c

Quizplus · Accepted Answer

All three statements illustrate how economic agents (car owners, banks, and firms) respond to incentives such as lower prices, cost savings, and higher selling prices.

Consider the Following Statements