6. Suppose that 20 students from your economics class each pay $20 to enter a grades-

based contest. This would create a $400 prize pool.

An equal share of the $400 pot is awarded at the end of the term to each contestant who earns an A in the course. If four students earn A’s, they each receive $100. If only one student earns an A, that person gets the entire $400 pot. What economic concept is this contest harnessing in order to encourage participants to learn more?

✷

✷

QUESTIONS F OR R EVIEW