Question

Incentives matter. Explain why businesses and entrepreneurs are more likely to voluntarily undertake the projects that consumers value highly relative to price and less likely to undertake the government-sponsored projects in which the per-unit cost of production is above the price consumers willingly pay.

Answer 1

The profit motive businessman and entrepreneurs focused the projects which consumers give more value. The incentives are powerful devices which can be applying everything humans do. In case of a payback from specific choice increases then large number of people prefer that one. The entrepreneurs prefer the products which consumers give more value without considering the price. A profit motive firm tried to acquire more by using any kind of measures. Incentives attract more workers to the market and thus the production can be improved.
There are mainly five types of incentives; Tax incentives, financial incentive, subsidies, tax rebates and negative incentives. Tax incentives include the tax benefits that government make to encourage the production. Financial incentive to the producers through monetary assistance will improve production using modern technology or reducing costs. The financial incentives given to employees encourage the participation of workers in the market. Subsidies can reduce the cost or price of the product. Using the subsidy the producer can produce what the customer demanded without considering ay constraints.