3.Suppose that you observed the following set of data: Average Business School tuition: $30,000 Average Salary for non-MBA’s: $50,000 per year Average MBA salary: $90,000 per year. The length of an MBA program is 2 years and is assumed that and MBA will have a working career of 20 years after graduation. Further, suppose that, instead of going to get an MBA, 2 you could keep your current non-MBA job and invest what you could have used to pay for tuition, risk free, at 4% per year. SHOW ALL YOUR WORKING. a) Is this set of data consistent with market equilibrium? Explain. b) If your answer to (a) is no, how will markets adjust?
3.Suppose that you observed the following set of data: Average Business School tuition: $30,000 Average Salary for non-MBA’s: $50,000 per year Average MBA salary: $90,000 per year. The length of an MBA program is 2 years and is assumed that and MBA will have a working career of 20 years after graduation. Further, suppose that, instead of going to get an MBA, 2 you could keep your current non-MBA job and invest what you could have used to pay for tuition, risk free, at 4% per year. SHOW ALL YOUR WORKING. a) Is this set of data consistent with market equilibrium? Explain. b) If your answer to (a) is no, how will markets adjust?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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3.Suppose that you observed the following set of data: Average Business School tuition: $30,000 Average Salary for non-MBA’s: $50,000 per year Average MBA salary: $90,000 per year. The length of an MBA program is 2 years and is assumed that and MBA will have a working career of 20 years after graduation. Further, suppose that, instead of going to get an MBA,
2
you could keep your current non-MBA job and invest what you could have used to pay for tuition, risk free, at 4% per year.
SHOW ALL YOUR WORKING.
a) Is this set of data consistent with
b) If your answer to (a) is no, how will markets adjust?
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