Some college students have claimed that because their incomes will be higher as a result of attending college, there is no opportunity cost of attending college. Do you agree? Explain.
What will be an ideal response?
No. Although estimates of the rate of return on a college education are fairly high, this does not eliminate the opportunity cost of attending. Besides the explicit (out-of-pocket) costs of tuition, books, etc., there is the implicit cost of forgone income during college years. It should be noted, however, that if students have very low value in the labor marketplace, then the implicit cost would be low—but not zero.
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A reduction in a monopolist's fixed costs would
a. decrease the profit-maximizing price and increase the profit-maximizing quantity produced. b. increase the profit-maximizing price and decrease the profit-maximizing quantity produced. c. not effect the profit-maximizing price or quantity. d. possibly increase, decrease or not effect profit-maximizing price and quantity, depending on the elasticity of demand.
Why are expectations important when discussing profits? What effects do these profit expectations have on the economic system?
What will be an ideal response?