People Respond to Incentives

question 15

Multiple Choice

People respond to incentives

• A) by ignoring negative incentives and responding to positive incentives only.
• B) only when they are irrational.
• C) by calculating their individual costs and benefits and determining which is greater.
• D) when they have low incomes.

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Definitions:

Income Statement

A financial statement that shows a company’s revenues, expenses, and profits over a specific period, typically a quarter or year.

Credit Application

A form or request made by an individual to a financial institution for extending credit.

Capacity

The maximum amount that something can contain or produce.

Conditions

The specific requirements, terms, or circumstances that are outlined in a contract or agreement.