Consider the following statements: a. Consumers rent more kayaks from a vendor that rents kayaks at a lowerprice than other ri

Consider the following statements:
a. Consumers rent more kayaks from a vendor that rents kayaks at a lowerprice than other rival kayak vendors along Waikiki beach.
b. Department stores take steps to increase security since they believe it is morecostly to allow shoplifting than to install expensive security monitoring equipment.
c. Farmers produce more cotton when its selling price falls.Which of the above statements demonstrates that economic agents respond to incentives?

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  1. Answer:

    B : Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment.

    Explanation:

    Shoplifting is a major headache to departmental stores and expensive security monitoring equipments may have a higher cost and set up expenses. However, in the long run this cost will justify the investment in controlling shoplifting which could cause losses of unpredicted proportion.

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