Scenario 18-7 Suppose the Following Events Occur in the Market for University

question 216

Multiple Choice

Scenario 18-7
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.
-Refer to Scenario 18-7. 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 wages.

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