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

question 21

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 wages 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 wage.

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Definitions:

Long-lived Assets

Assets that are expected to provide economic benefits over a period of time longer than one fiscal year.

Cumulative Weighted Average Expenditure

The sum of all expenditures over a period weighted by the time each amount was incurred, providing a means to calculate average costs or investments over that period.

Construction Loan

A short-term loan provided to finance the building of a property or real estate project, typically converting into a long-term mortgage upon completion.

Capitalized Cost

The total of all costs incurred to acquire an asset and prepare it for its intended use, often including the purchase price and costs of installation.