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

• A. Government regulations exclusively
• B. Only the prices of goods and services
• C. The choices and behavior of buyers and sellers
• D. The supply of money in the economy

Answer: (C)

Verified step by step guidance

1. Understand the concept of incentives in microeconomics: Incentives are factors that motivate or influence the choices and behaviors of economic agents, such as buyers and sellers.
2. Recognize that incentives are not limited to government regulations alone; while regulations can act as incentives, incentives broadly include prices, taxes, subsidies, and other factors.
3. Recall that prices of goods and services are one type of incentive, but incentives also include other elements that affect decision-making beyond just prices.
4. Identify that incentives primarily affect the choices and behavior of buyers and sellers because these economic agents respond to changes in costs, benefits, and rules in the market.
5. Conclude that incentives influence the decisions made by buyers and sellers, rather than exclusively affecting government regulations, prices alone, or the supply of money.