Explain the economic idea that "people respond to incentives."
What will be an ideal response?
Human beings act from a variety of motives, including religious belief, envy, and compassion. "People respond to incentives" means that people will act in the way that they feel is in their best interest.
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The market demand curve for mousetraps is
A) found by summing the quantities of mousetraps demanded at each income level by each buyer. B) found by summing the prices of mousetraps at each quantity of mousetraps demanded by each buyer. C) the horizontal sum of the individual demand curves for mousetraps of all the buyers. D) Both answers B and C are correct. E) Both answers A and C are correct.
If a firm takes the wage as given, then the firm's marginal expenditure on labor curve is
A) above the labor supply curve. B) below the labor supply curve. C) the same as the labor supply curve. D) upward sloping.