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) c only
D) a and b
E) a, b, and c

Question

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) c only
D) a and b
E) a, b, and c

Quizplus · Accepted Answer

Statement a shows consumers responding to the incentive of lower prices. Statement b shows schools responding to the incentive of reducing costs associated with vandalism. Statement c does not demonstrate a response to incentives, as it suggests an inverse relationship between price and production, which is not typical economic behavior.

Consider the Following Statements