PRESENTATION OUTLINE
In economics is the hope of reward or the punishment that encourages a person to behave a certain way.
Adam Smith observed that people respond predictably to both positive and negative incentive of lower price.
As for consumers, we can predict that they will respond to the positive incentive of lower price.
Example:
People will be motivated to compete when it involves money as the price.
Example:
When a manufacture produces two types of shoes and one sells more than the other, the manufacturer has the incentive to produce more of that type of shoe.
