Consider the following statements: a.Consumers rent more DVDs from a video store that rents DVDs at a lower price than other rival video stores in the area.
B.Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment.
C.Farmers produce more cotton when its selling price falls.
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

Quizplus · Accepted Answer

All three statements illustrate how economic agents respond to incentives. In statement A, consumers are incentivized to rent from a lower-priced video store in order to save money. In statement B, department stores are incentivized to increase security in order to avoid the costs associated with shoplifting. In statement C, farmers are incentivized to produce more of a good when its selling price falls in order to maintain their revenue.

Consider the Following Statements: A