Question

You and other college students are deciding whether to major in music or engineering. You learn that there is a shortage of engineers making it easy for engineering graduates to find employment while there is a glut of musicians for whom finding a job is difficult. As a result, you and many other college students decide to major in engineering. What economic principle does this illustrate?
a. Specialization leads to economic efficiency
b. Government intervention can improve efficiency when there is a market failure
c. Individuals do not normally take into account the decisions of other individuals
d. Markets tend to move towards equilibrium as individuals respond to incentives
e. Changes in incentives are unlikely to change the decisions people make

Answer 1

The correct answer would be option D, Markets tend to move towards equilibrium as individuals respond to incentives.

As a result, you and many other college students decide to major in engineering. This illustrates the principle of Equilibrium as individuals respond to incentives.

Explanation:

When supply and demand in an economy balances in the market keeping all other factors constant, then this situation is called as Market Equilibrium. With the change in these factors of the economy, the market equilibrium also changes, and there might be no equilibrium depending upon them at some point of time.

So when students see that there is a demand of engineering in the economy and music graduates are having difficulty in getting jobs due to more supply of music graduates, students move towards the engineering field in order to achieve the market equilibrium as they want to get jobs as an incentive.

Learn more about Market Equilibrium at:

brainly.com/question/91783

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