Scenario 18-8
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become a university economics professor.
Event 2: A decreasing number of students in U.S. primary and secondary schools decreases the number of students entering college, decreasing the output price of university economics professors' services.
-Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium quantity of university economics professors will
A)increase.
B)decrease.
C)not change.
D)It is not possible to determine what will happen to the equilibrium quantity.

Question

Quizplus · Accepted Answer

Event 1 increases the supply of professors by lowering opportunity costs, while Event 2 decreases demand by lowering the output price. The net effect on equilibrium quantity is indeterminate without knowing the relative magnitudes of these shifts.

Scenario 18-8 Suppose the Following Events Occur in the Market for University