Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics increases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium wage for university economics professors will

Question

Quizplus · Accepted Answer

If the opportunity cost of obtaining a Ph.D. increases, fewer individuals may choose to pursue it, leading to a decrease in the supply of economics professors. With a lower supply and constant demand, the equilibrium wage is likely to increase.

Consider the Market for University Economics Professors