Which of the following groups is most likely to respond to the incentive of higher profits?

• A. Consumers purchasing goods
• B. Employees seeking job security
• C. Government regulators
• D. Entrepreneurs starting new businesses

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of incentives in microeconomics. Incentives are factors that motivate individuals or groups to behave in certain ways, often to maximize their utility or profits.
2. Step 2: Identify the groups listed and consider their primary motivations. Consumers typically respond to price changes and personal preferences, employees often prioritize job security and wages, and government regulators focus on public welfare and policy enforcement.
3. Step 3: Recognize that entrepreneurs are motivated by the potential for higher profits, which serves as a strong incentive for them to start new businesses or innovate.
4. Step 4: Analyze how higher profits act as a direct incentive for entrepreneurs, encouraging risk-taking and investment, unlike the other groups whose incentives are less directly tied to profit maximization.
5. Step 5: Conclude that among the groups listed, entrepreneurs starting new businesses are most likely to respond to the incentive of higher profits because profit is their primary motivator.