KSA Economics - Incentives, Choices, & Decision Making

How may scarcity affect decision making?

• The availability of a resource may require the government to place production quotas on businesses that use the resource during production.

• The availability of a resource may force the government to make choices about how to allocate the resource most effectively.

How does scarcity force businesses to evaluate trade-offs?

• Businesses must evaluate how to utilize limited resources to achieve their desired outcome.

• Businesses must research new production methods to offset the lack of resources.

What are the purpose of positive incentives?

• to motivate and influence positive behaviors such as increased production

• to punish undesirable behavior in order to refocus on productivity

Which of the following is an example of a positive government incentive?

• providing subsidies and tax breaks to companies to research renewable energies

• requiring employee training for employees of industries in essential manufacturing sectors

Which of the following is an example of a government incentive to promote business innovation?

• providing tax breaks for businesses

• enforcing sanctions on businesses

What is the purpose of negative incentives?

• to stimulate economic recovery

• to discourage unwanted business practices

Which of the following is a negative government incentive on business?

• the government fines a business for polluting

• Low interest rates

How may incentives influence labor?

• Incentives increase profits by attracting consumers

• Incentives enhance productivity by motivating workers

What does a cost-benefit analysis measure?

• It measures the total revenue generated by a project or based on a decision.

• It measures the benefits versus the costs of a decision or project.

Why would businesses use a cost-benefit analysis?

• to evaluate the financial implications of decisions by comparing costs and benefits

• to determine employee productivity and determine employee incentives