Suppose the Following Events Occur in the Market for University

question 98

Multiple Choice

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: An increasing number of students in U.S.primary and secondary schools increases the number of students entering college,increasing the output price of university economics professors' services.
As a result of these two events,holding all else constant,what will likely happen to the equilibrium wage of university economics professors?

• A) The equilibrium wage will increase.
• B) The equilibrium wage will decrease.
• C) The equilibrium wage will not change.
• D) It is not possible to determine what will happen to the equilibrium wage.

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Definitions:

Unrealized Loss

A loss that results from holding an asset that has decreased in value, but the asset has not yet been sold.

Fair Value Adjustment

A financial accounting process of adjusting the fair market value of assets and liabilities.

Unrealized Loss

A decrease in the value of an investment that has not yet been sold and thus, the loss has not been realized.

Gain on Sale of Investment

The profit realized from selling an investment for more than its purchase cost.