We make choices at the margin. Incentive influences choices. Incentive is the inducement of taking a specific action.
People weigh the marginal cost and marginal benefit when they make a choice. For example, suppose you work three days a week and now you want to make it four days. However, you have to give up an extra day to hang out with your friends. The marginal cost of working three days is the day that you will not hang out with your friends. The marginal benefit is the pay you get from the extra day.
Assume the wage rises while everything else stays the same, and then the marginal benefit of working an extra day will increase. However, the opportunity cost of hanging out with your friend increases as well.
The market is changing all the time, so it is important for you to make the right choice!!
