Rational Self-Interest: The world works because of the self-interest of individuals. People are motivated by what motivates them. Self-interest motivates economic activities. Producers are always competing against each other, which means their interests are kept in check, which means they want to climb higher or stay at the top, never falling behind. A person works or goes to school for personal gain. You work for a paycheck or go to school to get a degree. Adam Smith describes self-interest as the invisible hand according to the article titled The Invisible Hand Theory Is Tested on the Environment. “Smith's description of the invisible hand theory states that individuals pursuing self-interest frequently promote the good of society rather than when actually intending to promote it. he. There is also a negative side to self-interest. Self-interest without morality leads to capitalism. Self-interest fails to be sustained in many ways; first, it fails when market completion collapses. Second, it can turn into unacceptable inequalities such as fraud, luck or power wealth. Self-interest can be both a great thing and, if not careful, a devastating thing for the market economy. Incentive: Incentive – something that motivates a person to act. Incentive plays a major role in economics. According to the textbook Principles of Microeconomics, “A higher price in a market encourages buyers to consume less and sellers to produce more. » For example, if the price of chocolate chip cookies is too high, shoppers will buy less or not buy them at all, or switch to a substitute product. A cigarette tax encourages people to turn to alcohol or other illegal drugs. If two identical companies are hiring, one company's wage is $16 per hour for 8 hours of work and the...... middle of paper ...... market where marijuana or other If illegal drugs were to be legal, the economy would have a major boost. According to We are the Drug Policy Alliance, "the legalization and regulation of marijuana will bring the nation's largest cash crop under the law, creating jobs and economic opportunities in the formal economy rather than the marketplace." illicit. » For example, if producers make more good quality (legal) medicines that are professionally inspected, of course buyers' willingness to pay for good quality legal medicines will increase, producers will have money to make more supplies and pay taxes to the government. Additionally, the crime rate would decrease since people are not likely to rob other people for their drugs, selling drugs would be legal and not a crime, and prisons would be less filled with drug criminals, which which means less taxpayer money will go to the prison system.