ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Higher prices are an incentive to sellers to increase production to make more goods. But the biggest incentive for sellers is knowing that when prices rise, their profits will probably rise, too.

Detailed explanation-2: -give producers an incentive to produce more. An increase in the price of the goods increases the total revenue of the producers from selling each good in the market. It incentivizes the producers to produce more at a higher price to earn more revenue and gain higher profits.

Detailed explanation-3: -Market based economies utilize the power of profit as an incentive. Profit motivates entrepreneurs to accept the risk of acquiring and organizing resources to seek market opportunities. The entrepreneur takes whatever profit or loss results from an enterprise.

Detailed explanation-4: -A direct incentive is an action taken with the objective of causing another action (or other actions). It is easy to recognize.-A gas station lowers gas price in order to attract more customers.-The Government provides unemployment benefits so that the unemployed do not live in abject poverty.

Detailed explanation-5: -If the cost of production is lower, the profits available at a given price will increase, and producers will produce more. With more produced at every price, the supply curve will shift to the right, meaning an increase in supply.