To be effective, firms need to:

• A. avoid offering any rewards or bonuses to workers
• B. set prices without considering consumer behavior
• C. ignore market signals and focus solely on production
• D. design incentives that align employees' interests with organizational goals

Answer: (D)

Verified step by step guidance

1. Understand the role of incentives in microeconomics: Incentives are crucial because they influence the behavior of individuals and firms by aligning their interests with desired outcomes.
2. Recognize that firms aim to maximize their profits and efficiency, which requires motivating employees to work towards organizational goals.
3. Analyze why avoiding rewards or bonuses is ineffective: Without incentives, employees may lack motivation to perform well, leading to lower productivity.
4. Consider the importance of setting prices based on consumer behavior and market signals, as ignoring these factors can lead to suboptimal decisions.
5. Conclude that the most effective approach for firms is to design incentives that align employees' interests with organizational goals, ensuring motivation and better performance.