What aspect does the question 'How will others respond?' examine in economics?

The question 'How will others respond?' deeply examines incentives, which are central to understanding economic behavior. Incentives refer to the factors that motivate individuals and firms to make decisions. When considering how others might respond to a change in the environment—such as a new policy, market shift, or economic event—it's crucial to recognize how their motivations and incentives will influence their actions.

For instance, if a government increases taxes on a certain good, consumers may choose to buy less of that good, while producers might reduce supply due to lower profit margins. Both reactions are driven by the incentives that have changed as a result of the tax. This concept is fundamental in economics because it highlights the interconnectedness of decision-making and the consequences of those decisions in various economic contexts. Understanding incentives allows economists to predict behavior in response to specific changes, making it a vital aspect of economic analysis.