Question

Consider the market for medical doctors. suppose the opportunity cost of going to medical school decreases for many individuals. suppose it generally takes about ten years to become a practicing doctor. holding all else constant, in ten years the equilibrium wage for doctors will
a. increase.



b. decrease.



c. not change.



d. it is not possible to determine what will happen to the equilibrium wage.

Answer 1

Answer:

Option a=> increase.

Explanation:

The cost of choice is the simplest definition of opportunity cost. So, let me explain what I mean by that for instance now, assuming you have 100 United States Dollar with you, and need to save up maybe you want to buy something at the end of the year. Then, a financial institution, a bank wants to give you 10% interest when you save with them that is to say at the end of the year, you get $110 but you decided not to put your money in bank but instead keep it in a corner in your house. What is forgone in order to get another thing is called the opportunity cost.

When the opportunity cost of going to medical school decreases for many individuals after ten years, the equilibrium wage for doctors will INCREASE.