An incentive is something that induces an action or greater effort to produce a desirable outcome or to avoid an undesirable outcome. Thus, the incentives can be positive or negative. For example, if a worker feels that he is paid better by the boss, he tends to work harder. On the other hand, if the meat prices go up, people will definitely begin to consume less meat. In short, people respond to incentives. In our example, the government’s intervention into economy by increasing the tax on cigarettes by 20 % will increase the price of cigarettes, and this will eventually lead to a drop in consumption. The correct answer is A.