QAEconomics › In the market, actions known as incentives affect:

In the market, actions known as incentives affect:

A. Producers only.

B. Consumers only.

C. Consumers or producers.

D. Neither consumers nor producers.


Answer: C. Consumers or producers.

Incentives are motivational tools used to induce people to work in the desired direction. Motivations are known to change the general conduct of individuals and this change in conduct will in turn influence either the producers or the consumers. Producers introduce incentives in order to encourage consumers and also make them accomplish a task the producer desires. Also, the producer is assured of getting really good levels of output. With this, the producer derives profit while the consumers are attracted to the product as a result of its value and little cost.

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