The decision to go to graduate school is a rational one for a college student if the
A) cost is not too great.
B) marginal cost exceeds the marginal benefit of graduate school.
C) marginal benefit of graduate school exceeds the marginal cost.
D) opportunity cost of graduate school equals zero.
E) student carefully compared the social benefits of this decision.

Question

Quizplus · Accepted Answer

Since the decision to go to graduate school is rational, the student must be comparing the marginal cost and marginal benefit of attending graduate school. The rational decision, therefore, is to attend graduate school only if the marginal benefit exceeds the marginal cost. So, option C is the correct choice. Option A does not take into account the relative value of the cost; option B is partially correct but has the wrong direction of marginal cost and benefit; option D assumes the opportunity cost is zero which is rarely the case; option E is not relevant to the decision-making process.

The Decision to Go to Graduate School Is a Rational