According to a recent study of Italian bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics

Question

Aleah James

Social Studies

22 July, 14:17

According to a recent study of Italian bus drivers, drivers who are paid by the number of passengers they transport have higher productivity than drivers who are paid by the hour. This result is an example of which principle of economics

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Answers (1)

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Ahmed Leonard · Answer 1

The answer to the question: This result is an example of which principle of economics:___, would be: incentives.

Explanation:

Economics is the science that dedicates to study all that has to do with the production, consumption, generation and transfer of wealth. As a science, economics is based on five major principles which are the basic to be known by any student and these are: rationality, costs, benefits, incentives, and marginal analysis. In this particular case here, the bus drivers who are being paid by passenger transported are motivated to work harder, and longer, because they will get paid for every passenger that is transported, whereas those who have a fixed salary, regardless of the number of passangers will not try harder. This situation fits perfectly in the principle of incentives, in economics and it means that people are motivated and respond better to incentives, thus becoming more productive when there are incentives involved.