People Respond to Incentives - Video Tutorials & Practice Problems

Economic Incentives

next we have the idea that people respond to economic incentives, right? So incentives. It's people taking advantage of opportunities to make themselves better off. So a lot of times in the in these classes they used the word exploit right? They exploit opportunities to make themselves better off. Um I saw this really funny example um It was about getting an oil change in new york city. So in N. Y. C. Parking for the day when you go you know downtown to to go to your job you could be spending for an all day parking upwards of 40 50. I don't know. Someone from from new york could probably tell us better but parking in new york is no joke. So what people started doing was realizing that they could go to a mechanic and just get an oil change And the oil change random let's say $25 $30 and they ended up being able to leave their car at the mechanic all day. So people started just going to the mechanic and getting an oil change and it's cheaper literally than just parking for the day. It's crazy. And another example something very simple. What about apples? You know when the prices of apples go up people stop buying apples they start buying oranges or they buy something else right? They're gonna exploit opportunities to make themselves better off. Oh apples are gonna be more expensive. The price goes up. Well I'll take my business elsewhere. The quantity of apples it's gonna go down there. People are gonna be buying apples anymore. They're gonna buy something else. So they're gonna take advantage of that opportunity.