Question 2: Which of the following describes the fundamental reason why incentives matter in economics? a. Incentives are a precise way to measure the reward of certain economic activities. b. Understanding incentives helps economists predict people's behaviour. c. Incentives only matter insofar as they can be positive economic phenomena. d. Understanding incentives is key to understanding scarcity.
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While incentives can indeed be a way to measure the reward of certain economic activities, this is not the fundamental reason why they matter in economics. b. This is the correct answer. Incentives matter in economics because they influence people's behavior. Show more…
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