Mankiw's Fourth Economic Principles

One of the clearest examples of an example of one of the economic concepts that we discussed in class that I have seen at work is Mankiw’s fourth economic principle. His fourth economic principle states that people respond to incentives and the ways I see this at the workplace are limitless. I work as a content manager for a digital marketing agency that is owned by a good friend of mine. The only reason he decided to open up his own business rather than join an existing company was down to incentives. He felt he could earn more money and have more personal freedom if he opened up his own firm opposed to working elsewhere. This is one reason it is important to keep the entry for creating a business low so young people like him can easily enter

We have two sales people in the office. One is paid on commission and the other is on salary. The worker who is on commission makes calls much more frequently and more aggressively than the salaried employee since his income is guaranteed. This is the reason so many stores offer commission to their employees. The incentive of a little extra cash drives them to increase their performance. Not only are their positive incentives for our sells people, but also negative. This may seem silly, but whoever does not meet quota must buy snacks for the office. This obviously is not much, but it does create an extra push for them to try as hard as they can to sell as much as they

For example, since referrals are one of the best ways to obtain new clients that provides us the incentive to give our clients the best service possible. If we do not we, might miss out on a great deal of new clients. The most obvious way incentives affect our business practices is how we attract customers to begin with. Especially since we are such a small business with little brand recognition, it is very important that we offer benefits to incentivize customers to work with us. To do this we have to offer some of the cheapest rates in the Las Vegas area. The draw of this is obvious, by spending less money on their website they can put that money in other places. We offer more flexible payment options so that we can work with their budget. This greatly reduces the strain of having to pay all up front for their website and allows them to divide their cost into smaller more manageable chunks. Compared to large corporations our development times are much shorter, allowing businesses to establish their online presence as soon as possible. The quality of our websites are much higher than their prices would normally indicate. We do this since one of our main missions is to allow small business to be able to afford to have websites that allow them to compete with their larger competitors. Finally, we offer a level of customer service