To determine the economic concept used by Ultrinsic.com to encourage participants to learn more and get better grades, let's consider the structure and motivation behind the grades-based contests:
1. Identification of the Contest Structure: Each student pays an entry fee to create a prize pool. For this example, 15 students each pay [tex]$60, resulting in a $[/tex]900 prize pool.
2. Allocation of the Prize Pool: The prize pool is divided amongst students who receive an A grade. Suppose:
- If 4 students earn A's, the prize pool of [tex]$900 is divided equally, giving each student $[/tex]225.
- If only 1 student earns an A, that student receives the entire $900.
3. Incentive for Better Performance: The setup of the contest creates a clear financial reward for students who perform better:
- The potential to earn a share of the prize pool provides an external reward or incentive.
- Students are motivated to study harder and aim for higher grades to maximize their potential earnings.
From the provided choices:
- A. Marginal Thinking: Involves considering additional benefits and costs.
- B. Trade-offs: Refers to giving up one thing for another.
- C. Trade Creates Value: Involves the idea that voluntary exchange benefits all parties.
- D. Opportunity Costs: This is the cost of the next best alternative foregone.
- E. Incentives: Refers to external motivations for people to exert effort or engage in certain behaviors.
Given the structure of Ultrinsic.com’s contest, the primary tool used to encourage better performance is the promise of a financial reward based on academic achievement. This is best described by option E: Incentives.
Thus, the economic concept Ultrinsic.com uses to encourage participants to learn more and get better grades is incentives.
Answer:
O E. incentives
