Podcast
Questions and Answers
A company is considering launching a new product line. Using marginal thinking, what is the most relevant factor they should consider?
A company is considering launching a new product line. Using marginal thinking, what is the most relevant factor they should consider?
- The total revenue the company earned last year.
- The average customer satisfaction rating of existing products.
- The additional revenue expected from the new product line compared to the additional costs. (correct)
- The initial investment made when the company was founded.
What is the primary role of incentives in influencing economic behavior?
What is the primary role of incentives in influencing economic behavior?
- To complicate the decision-making process.
- To ensure equal distribution of resources.
- To motivate and shape specific actions or decisions. (correct)
- To discourage any form of risk-taking.
A city offers a tax break for companies that relocate and create jobs. How is this incentive MOST likely to affect economic behavior?
A city offers a tax break for companies that relocate and create jobs. How is this incentive MOST likely to affect economic behavior?
- It will have no impact, as companies prioritize other factors.
- It will likely reduce the overall number of jobs in other cities.
- It will definitely result in all companies relocating to that city.
- It will encourage companies to consider relocating, potentially increasing job creation in that city. (correct)
A student is deciding whether to spend an hour studying for an exam or working at a part-time job. According to marginal thinking, what should the student prioritize?
A student is deciding whether to spend an hour studying for an exam or working at a part-time job. According to marginal thinking, what should the student prioritize?
How does marginal thinking relate to the concept of opportunity cost?
How does marginal thinking relate to the concept of opportunity cost?
Flashcards
Incentives
Incentives
Factors that motivate specific behaviors, influencing economic decisions.
Monetary Incentives
Monetary Incentives
Incentives that involve financial rewards or penalties.
Non-Monetary Incentives
Non-Monetary Incentives
Incentives that do not involve money, like recognition or satisfaction.
Marginal Thinking
Marginal Thinking
Signup and view all the flashcards
Incremental Decisions
Incremental Decisions
Signup and view all the flashcards
Study Notes
Incentives & Marginal Thinking
- Incentives motivate specific behaviors and can be monetary or non-monetary
- Incentives shape economic decisions
- Marginal thinking involves evaluating additional costs and benefits of incremental decisions
- An example includes deciding whether to study one more hour
- Marginal thinking helps make better economic choices
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Explore how incentives, both monetary and non-monetary, drive behavior and shape economic decisions. Learn about marginal thinking, which involves weighing additional costs and benefits for better choices. Understand how considering the implications helps in making sound economic judgments.
