Which of the following scenarios best exemplifies self-interest in response to incentives?

• A. A person donates anonymously to charity without expecting any reward.
• B. A company provides free public goods to benefit society.
• C. A student studies harder after learning that top grades will earn a scholarship.
• D. A government imposes a tax to reduce pollution.

Answer: (C)

Verified step by step guidance

1. Understand the concept of self-interest in microeconomics: it refers to individuals or entities making decisions that maximize their own benefit or utility in response to incentives.
2. Analyze each scenario to identify if the action is motivated by a personal benefit or reward (an incentive) that influences behavior.
3. For the first scenario, donating anonymously to charity without expecting a reward does not reflect self-interest responding to an incentive, since no personal gain is expected.
4. For the second scenario, a company providing free public goods to benefit society is acting for social benefit rather than direct personal gain, so it is not primarily self-interest responding to incentives.
5. For the third scenario, a student studying harder after learning that top grades will earn a scholarship clearly shows self-interest: the student is motivated by the incentive of a scholarship to improve their effort and outcome.