Question

Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics increases 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 quantity of university economics professors will(A) The equilibrium quantity will increase. (B) The equilibrium quantity will decrease.(C) The equilibrium quantity will not change.(D) It is not possible to determine what will heppen to the equilibrium quantity

Answer 1

Answer: the correct answer is B the equilibrium quantity will decrease

Explanation:

The opportunity cost of the Ph.Ds in this case is the money that students could have been making if the were working in other activity. In this case, the cost of opportunity increases which means that students are giving up income for studying so there's incentive to drop out and sell hamburgers instead. In the future there will be fewer PHds since many were busy selling hamburgers instead of studying so in the long run, the equilibrium quantity will decrease.