Suppose That an MBA Degree Creates No Externality Because the Benefits

question 132

Multiple Choice

Suppose that an MBA degree creates no externality because the benefits of an MBA are internalized by the student in the form of higher wages. If the government offers subsidies for MBAs, then which of the following statements is correct?

• A)The equilibrium quantity of MBAs will equal the socially optimal quantity of MBAs.
• B)The equilibrium quantity of MBAs will be greater than the socially optimal quantity of MBAs.
• C)The equilibrium quantity of MBAs will be less than the socially optimal quantity of MBAs.
• D)There is not enough information to answer the question.

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Definitions:

Independent Variables

Independent variables are the factors in an experiment that are manipulated or changed by the researcher to investigate their effects on the dependent variables.

Distribution

The way in which something is shared or spread out over an area or among a population.

COV

The coefficient of variation, a measure of relative variability that describes the ratio of the standard deviation to the mean.

Independent Variables

Variables in an experiment that are manipulated or chosen by the researcher to investigate their effects on the dependent variable.