Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 7CACQ
To determine
(a)
To explain:
The rationality of an individual to pursue an MBA degree.
To determine
(b)
To explain:
The impact on applicants.
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A young person entering the job market may be talented or untalented.Suppose that one-quarter of high school graduates are talented, and the rest untalented. A recent high school graduate, who knows whether or not he is talented, has the option of spending a year traveling overseas or enrolling at college (we will assume that he or she cannot do both) before applying for a job. An employer seeking to fill a job opening cannot know whether or not a job applicant is talented; all he knows is that the applicant either went to college or traveled overseas. The payoff an employer gets from hiring a worker depends solely on the talents of the hired worker (and not on his educational level), while the payoff to the youth depends on what he chose to do after high school, on his talents (because talented students enjoy their studies at college more than untalented students), and on whether or not he gets a job. These payoffs are described in the following tables (where the employer is the row…
1. It is estimated that over 100,000 students will apply to the top 30 MBA programs in the United States this year.
a. Using the concept of net present value and opportunity cost, explain when it is rational for an individual to pursue an MBA degree.
b. What would you expect to happen to the number of applicants if the starting salaries of managers with MBA degrees remained constant but salaries of managers without such degrees decreased by 20 percent? Why?
Prompt
Earning a college degree has some well-known and well-documented advantageous impacts on an individual. That is the motivation for people to delay their entry into the workforce for four or five years while they earn a baccalaureate degree. However, studies have shown significant positive impacts on the community, the state, and society caused by higher education. For example, states with more college-educated people also display better health conditions, higher earnings, lower crime, more innovation, and a general increased standard of living. In the language of our current module, higher education is a positive externality. The person deciding to attend college is doing it for the benefits she will receive from this new knowledge and experience. However, it is also true that there will be positive spillover effects on her community and state.
QUESTION-
We discovered that when an activity also produces a positive externality, the marginal social benefit (MSB) from that activity…
Chapter 1 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
Ch. 1 - Prob. 1CACQCh. 1 - What is the maximum amount you would pay for an...Ch. 1 - Prob. 3CACQCh. 1 - Prob. 4CACQCh. 1 - Prob. 5CACQCh. 1 - Prob. 6CACQCh. 1 - Prob. 7CACQCh. 1 - Prob. 8CACQCh. 1 - Prob. 9CACQCh. 1 - Prob. 10CACQ
Ch. 1 - Prob. 11PAACh. 1 - Prob. 12PAACh. 1 - Prob. 13PAACh. 1 - Prob. 14PAACh. 1 - Prob. 15PAACh. 1 - As a marketing manager for one of the worlds...Ch. 1 - Prob. 17PAACh. 1 - Prob. 18PAACh. 1 - Prob. 19PAACh. 1 - Prob. 20PAACh. 1 - Prob. 21PAACh. 1 - Prob. 22PAACh. 1 - Prob. 23PAACh. 1 - Prob. 24PAA
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