An Incentive Is

question 46

Multiple Choice

An incentive is

• A) a reward or a penalty that encourages or discourages an action.
• B) when people make rational choices by comparing costs and benefits.
• C) what you must give up to get something.
• D) a choice is made on the margin.
• E) a good or service that satisfies wants.

Compare and contrast monopoly with competitive markets in terms of efficiency and social welfare.

Describe the effects of government interventions and regulations on monopolies and natural monopolies.

Explain the concept of rent-seeking behavior and its implications for resource allocation.

Understand the role of barriers to entry and competition in maintaining monopolies.

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Definitions:

Public Good

A product or service offered for free to all society members, by either the government or a private entity, without the intent of making a profit.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are available for everyone to use and one person's use does not reduce availability to others.

Private Goods

Goods that are both rivalrous and excludable, meaning consumption by one person reduces availability for others and access can be restricted.

Tragedy of the Commons

A situation in which individual users, acting independently according to their own self-interest, deplete or spoil shared resources, even though it is contrary to the group's long-term interests.