An incentive is a reward or penalty that influences a choice. In a supplied model, you read the table or diagram, identify what changed, and describe the response using the numbers provided. This lesson belongs to specialisation and allocation, and prepares you for supply and equilibrium.
How do I describe an incentive from a table?
Use four short steps:
- State what changed: the price, wage or reward.
- Quote the figures before and after.
- Describe the response in the behaviour column.
- Link them: explain that the higher reward makes the activity more attractive, so more is supplied.
Stay inside the model. If the table does not mention weather, costs or competitors, do not bring them in as part of the described effect. If you think they matter, say so as an assumption or a limit.
Worked example
The fictional Orchard Hill farm supplies durian to a local market. The supplied schedule shows the weekly quantity the farm will offer at each price.
| Price per kg (RM) | Quantity supplied (kg) |
|---|---|
| 3 | 200 |
| 4 | 300 |
| 5 | 400 |
| 6 | 500 |
Question: Describe the incentive when the price rises from RM4 to RM5.
Step 1, what changed? Price rises from RM4 to RM5. That is +RM1, or 1 ÷ 4 × 100 = 25%.
Step 2, response. Quantity supplied rises from 300 kg to 400 kg. That is +100 kg, or 100 ÷ 300 × 100 = 33.3%.
Step 3, link. “A higher price gives the farm a greater reward for each kilogram, so it is willing to supply more. A 25% rise in price is matched by a 33.3% rise in quantity supplied.”
Step 4, name the movement. Because the price changed, this is a movement along the supply schedule, not a shift.
What mistake do students make?
Many students describe the change as an “increase in supply” and then draw a shifted curve.
Mistaken answer: Supply increases from 300 kg to 400 kg.
The schedule itself did not change. A price change causes an increase in quantity supplied, a movement along the schedule.
Correct it by asking: “What caused the change, the price or something else?” If it is the price, it is a movement.
Check yourself
Use the Orchard Hill schedule.
1. How much more will the farm supply if the price rises from RM3 to RM6?
Show answer
500 − 200 = 300 kg more.
2. The price falls from RM5 to RM4. Describe the incentive and the response.
Show answer
The reward per kilogram falls by RM1, so supplying is less attractive. Quantity supplied falls from 400 kg to 300 kg, a fall of 100 kg. It is a movement along the schedule.
3. A workers’ table shows 30 people willing to work at RM10 an hour and 36 at RM12. Describe the incentive in one sentence with percentages.
Show answer
A pay rise from RM10 to RM12 (+20%) makes the job more attractive, and the number willing to work rises from 30 to 36 (+20%).
Where does this lead next?
Reading a model is only half the skill. Next, learn to state who and what a model leaves out. The percentage-base explorer helps you check changes like the 25% and 33.3% above.
Our teachers can work through supplied schedules with you in online one-to-one Economics tuition.