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Incentives: Motivation, motivation and motivation for economic agents to participate in economic activity

   

Added on  2021-04-24

6 Pages701 Words343 Views
Running Head: ECONOMIC ASSIGNMENT Economic AssignmentName of the StudentName of the UniversityAuthor note
Incentives: Motivation, motivation and motivation for economic agents to participate in economic activity_1
ECONOMIC ASSIGNMENT 1Table of ContentsIntroduction......................................................................................................................................2Self-interest; good for the society....................................................................................................2Self-interest; not good for the society..............................................................................................3Conclusion.......................................................................................................................................4Reference List..................................................................................................................................5
Incentives: Motivation, motivation and motivation for economic agents to participate in economic activity_2
ECONOMIC ASSIGNMENT 2IntroductionIncentives are the basic of motivation for economic agents for participating in aneconomic activity. Adam Smith considered self-interest of individual is best for the society.However, there are situation where self-interest fails to achieve outcome best for the society. Thepaper discusses two instances, one in which self-interest maximizes social welfare and other inwhich self-interest motive is not good for social interest. Self-interest; good for the society Self-interest is the action associated with maximum benefit to the individual. AdamSmith known as father of modern economics first claimed that the best possible outcome for thesociety is derived from participation of self-interested economic events. Under this circumstance,the efficient outcome is produced and is sold at best possible price. For example, production anddistribution of private goods (Cowen & Tabarrok, 2015). The private goods sold in a competitivemarket constitutes the best example where self-interest maximizes individual as well as socialbenefit. In the transaction of private goods buyers and sellers participate in the marketplace. Thebehavior of buyers and sellers are reflected from the demand and supply curve. The demandcurve shows the marginal benefit to the individual. The behavior of the supplier on the otherhand is reflected from the corresponding supply curve. With increase in price, a rationalconsumer reduces its demand as the marginal benefits from additional units decline. The benefitto sellers on the other hand increases with increase in price (Fine, 2016). The decision in themarket is determined at the point where interest of the buyers matches with that of the interest ofthe sellers.
Incentives: Motivation, motivation and motivation for economic agents to participate in economic activity_3

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