The Law of Demand predicts an inverse or negative relationship between quantity demanded and the price of a good.Consumers react to changing price incentives by altering their consumption choices or the quantity demanded of goods.Higher (lower) prices require consumers to give up more (fewer) resources to obtain goods.Price acts as an incentive to consumers and producers. When opportunity costs change, incentives change, and people’s choices and behavior change.ĥ.Incentives can be either monetary or non-monetary. ![]() Incentives are the rewards or punishments that shape people’s choices. People can anticipate costs, but they occur only after a choice has been made.Ĥ.
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