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

question 509

Multiple Choice

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.

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Definitions:

Structural Unemployment

Unemployment caused by a mismatch between workers' skills and the requirements of available jobs, often due to technological or economic changes.

Frictional Unemployment

The short-term unemployment that arises from the process of matching workers with jobs, often due to workers changing jobs or entering the workforce.

Potential Output

The highest level of real GDP (gross domestic product) that can be sustained over the long term without increasing inflation.

Expected Price Level

The anticipated average level of prices for all goods and services in an economy for a future period, influenced by current and forecasted economic conditions.