Would economics be wrong if she cut all their pay

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Question: A local business owner tells you economics is wrong because people do not respond to incentives. She tells you that she increased all of her employees' pay by 10 percent and they did not work any harder. Is her conclusion justified? Why? Would economics be wrong if she cut all their pay and they did not try to get away with more loafing on the job?

Reference no: EM132122960

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