Question

At Ultrinsic, students pay a small entry fee to compete in grades-based contests for cash prizes. Suppose that 10 students from your economics class each pay $10 to enter a grades-based contest. This would create a $100 prize pool. An equal share of the $100 pot is awarded at the end of the term to each contestant who earns an A in the course. If four students earn A’s, each receives $25. If only one student earns an A, that person gets the entire $100 pot. What economic concept does Ultrinsic use to encourage participants to learn more and get better grades?

Answer 1

Answer: Incentives.

Explanation:

Incentive is an economic term that is introduce to motivate and encourage people towards some kind of work. Incentive is an amount of money that is given to the achiever.

Here, the incentive is the amount of money allotted for prize. Student knows that entry fees is $10 each. If a student scores A grade, then the maximum amount he can get from prize is $100, which is greater than the entry fees of the contest. So, there is a incentive for the students to score grade 'A'.

Therefore, this motivate students to study well and work hard.