Economists would predict that if salaries increased for engineers and decreased for MBAs, fewer people than before would go to graduate school in business and more than before would go in engineering, ceteris paribus.

Question

Quizplus · Accepted Answer

According to the law of demand, when the price of a good (in this case, salaries) increases, the quantity demanded of that good decreases, and when the price decreases, the quantity demanded increases. Therefore, if the salaries for engineers increase and the salaries for MBAs decrease, we would expect to see fewer people pursuing MBAs and more people pursuing engineering, as engineers are now relatively better paid compared to MBAs.

Economists Would Predict That If Salaries Increased for Engineers and Decreased