AP Microeconomics

Advanced Placement Microeconomics analyzing individual economic decision-making.

Practical Applications

Responding to Incentives in the Real World

Spotting and Using Incentives

Businesses, governments, and even friends use incentives to influence your choices. Recognizing incentives helps you make better decisions and avoid being manipulated.

Common Incentives

  • Coupons and discounts to encourage purchases.
  • Penalties for late library books to encourage returns.
  • Extra credit offered for completing assignments early.

Making Incentives Work for You

Look for positive incentives that help you reach your goals and be aware of negative incentives that might trip you up.

Examples

  • Using a gym membership discount as motivation to exercise more.

  • Returning library books on time to avoid late fees.