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Consider the Following Statements

question 216

Multiple Choice

Consider the following statements:
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?


Definitions:

Unsecured Promissory Note

A financial agreement for borrowing money that does not require collateral from the borrower.

Total Book Value

The net value of a company's assets found on its balance sheet, calculated by subtracting total liabilities from the total assets.

Corporate Promoter

An individual or entity involved in establishing a company or raising capital for it before its incorporation.

Common Shares

Represents ownership equity in a corporation, providing voting rights and dividends to shareholders.

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