Consider the market for university economics professors.Consider the following events. Event 1: Because of the dot.com bust of 2000 and the recession in the U.S.economy,the opportunity cost of going to graduate school to get a Ph.D.in economics - which one needs to become a professor of economics - decreased for many individuals.It generally takes about five years to get a Ph.D.in economics.
Event 2: There is an increasing number of students in primary and secondary U.S.schools.In 2005,the number of students entering college will have increased dramatically.Because of this,the output price of university economics professors' services will increase.
Holding all else constant,because of these two events,what likely will happen to the equilibrium quantity of university economics professors in 2006?

Question

Quizplus · Accepted Answer

Event 1 would lead to an increase in the supply of economics professors as more individuals choose to pursue a Ph.D. in economics due to the lower opportunity cost. However, Event 2 would increase the demand for economics professors due to the increasing number of students entering college. The increase in demand would be greater than the increase in supply, leading to an increase in the equilibrium quantity of economics professors.

Consider the Market for University Economics Professors