Think about each of the items in the list and explain how they affect incen-tives and might change the choices that people make:

What will be an ideal response?

• A hurricane hits Central Florida.
The hurricane affects the people in Central Florida and the consumers who purchase the products produced in Central Florida, such as oranges or vacation services. Residents' incentives change if they suffered damage from the hurricane because they have the incentive to repair the damage. If the price of home repair rises, residents who specialize in home repair have an incentive to work longer hours to earn the higher price. If the hurricane raises the price of the goods and services produced in Central Florida, consumers have the incentive to buy less of these particular goods and services because they are more expensive.
• The World Series begins tonight but a storm warning is in effect for the area around the stadium.
The report of the possible storm decreases fans' incentive to attend the game. Some fans decide to stay at home and watch the game on televi-sion.
• The price of a personal computer falls to $50.
The fall in the price of a computer increases consumers' incentive to buy a computer. More consumers decide to buy a computer. The fall in the price of a computer decreases producers' incentives to produce com-puters. Fewer producers decide to produce computers.
• Unrest in the Middle East sends the price of gas to $5 a gallon.
The rise in the price of gasoline affects drivers' incentives to buy gasoline and large gas-guzzling cars. Drivers decide to buy less gasoline and fewer large gas-guzzling cars. They also might decide to ride public transportation more often.