In the market, actions known as incentives affect _____.

In the market, actions known as incentives affect _____.

(a) only consumers

(b) only producers

(c) Both producers and consumers

(d) Neither consumers nor producers.

Answer: (c) Both producers and consumers

Promoters are factors which either act as inducements to alter the behaviour of various economic units which are involved in the production and consumption of goods and services. There are different types of incentives, including price incentives, which consist of changes in price levels; tax incentives, which are changes in taxation policies and procedures; subsidy incentives; and regulatory incentives. These incentives influence choices within producers in terms of what to produce and how much to produce and consumer choices in terms of what to consume and how much to consume. Through giving their response to these incentives, both the producers and consumers play a direct role in influencing the market development. So it would be wrong to state that incentives do not impact producers and consumers in the market; instead, incentives do reflect on both groups in the market.