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Your professor loves her work, teaching economics
Your professor loves her work, teaching economics. She has been offered other positions in the corporate world that would increase her income by 25 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal:
a) Cost of teaching increased,
b) Benefit of teaching increased,
c) Cost of a corporate job increased,
d) Benefit of a corporate job decreased.
Expert Solution
Answer: A
Rational people think at the margin. Thus, the professor will only leave her job if she will be better off at the corporate job than her teaching job. If it currently isn't, then either the net benefit (benefit minus costs) of the corporate job must increase or the net benefit of teaching fall. Both answers C and D reduce the net benefit of the corporate jobs. Answer B increases the net benefit of teaching. Only answer A reduces the net benefit of teaching and thus is the answer.
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