Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics decreases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium wage for university economics professors will
A)increase.
B)decrease.
C)not change.
D)It is not possible to determine what will happen to the equilibrium wage.

Question

Quizplus · Accepted Answer

If the opportunity cost of going to graduate school to get a Ph.D. in economics decreases for many individuals, this means that more people are likely to pursue this path, increasing the supply of potential university economics professors. With a higher supply, the equilibrium wage will decrease. Thus, the answer is B) decrease.

Consider the Market for University Economics Professors