Economic Scarcity and the Function of Choice:


The following exercises are designed to help students apply their knowledge on the

concept of economic scarcity and incentives that can influence our choices.



Exercise 2: Incentives

Below is a list of incentive plans provided by the government.



1.

Families who belong to the poorest of the poor will benefit in the government

program called 4Ps or Pantawid Pamilyang Pilipino Program. The 4Ps is a

human development measure of the national government that provides

conditional cash grants to the poorest of the poor, to improve the health,

nutrition, and the education of children aged 0-18. Each child receives every

month a health grant of Php 500 and another Php500 or Php300 for education

grant in high school and in elementary, respectively


2 .People that buy MRT passes on an annual basis gets a 30% discount.


3. The Liquor Commission imposes a 20% tax on all alcohol products sold.

Required:

For each incentive, determine the behaviour that the government is trying to

encourage.
​