In the market, actions known as incentives affect which of the following?

• A. The legal structure of the market
• B. The choices and behavior of buyers and sellers
• C. Only the prices of goods and services
• D. The physical characteristics of products

Answer: (B)

Verified step by step guidance

1. Understand the concept of incentives in microeconomics: Incentives are factors that motivate or influence the choices and behavior of economic agents, such as buyers and sellers.
2. Recognize that incentives do not directly change the legal structure of the market, which is determined by laws and regulations rather than individual motivations.
3. Note that while prices can be influenced by incentives, incentives themselves primarily affect the decisions behind buying and selling rather than just the prices alone.
4. Consider that physical characteristics of products are typically determined by production technology and consumer preferences, not directly by incentives.
5. Conclude that incentives mainly affect the choices and behavior of buyers and sellers, guiding how they respond to changes in prices, costs, and other economic factors.