A. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas 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?

Question

Business

Elaina Proctor

28 July, 07:27

A. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas 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?

+2

Answers (1)

Know the Answer?

Austin Rivas · Answer 1

The answer is: Both A and C

Explanation:

For any given group of products, a consumer will generally buy the less expensive product available. Their motivation is to save money, the less you spend the more you have.

From a company's perspective, it will always try to produce and sell more products when the price increases. Their motivation is to make more money and have a higher profit.