An Incentive Is

question 24

Multiple Choice

An incentive is

• A)the marginal cost of some course of action.
• B)a constraint that society imposes on those who make self-interested choices.
• C)the marginal benefit of some course of action.
• D)an inducement to take a particular action.
• E)the net gain of some course of action.

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Definitions:

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, holding all other inputs constant.

Factor Market

A marketplace for the services of a factor of production, such as labor, capital, or land, where these are bought and sold.

Marginal Productivity

Refers to the increase in output that arises from an additional unit of input, assuming all other factors of production remain constant.

Marginal Productivity Theory

An economic theory suggesting that payment to factors of production equates to their marginal contribution to the output.