In recent years unemployment has fluctuated along with the business cycle. Which

Question

In recent years unemployment has fluctuated along with the business cycle. Which of the following is most consistent with the ideas in the text?

Question 13 options:

1.Enrollment at community colleges would be unaffected by the business cycle because tuition is not affected by the business cycle.

2.Enrollment at community colleges would be lower when unemployment is higher because there are fewer instructors.

3.Enrollment at community colleges would be higher when unemployment is lower because students have more money to spend on tuition.

4.Enrollment at community colleges would be higher when unemployment is higher because the opportunity cost of time is lower

1.Enrollment at community colleges would be unaffected by the business cycle because tuition is not affected by the business cycle.

2.Enrollment at community colleges would be lower when unemployment is higher because there are fewer instructors.

3.Enrollment at community colleges would be higher when unemployment is lower because students have more money to spend on tuition.

4.Enrollment at community colleges would be higher when unemployment is higher because the opportunity cost of time is lower

Explanation / Answer

Solution: Enrollment at community colleges would be higher when unemployment is higher because the opportunity cost of time is lower

Explanation: Applying the Incentive Principle, we may observe enrollment at community colleges would be higher during times of high unemployment because the opportunity cost of time is lower because either the cost of going to college has gone down, or the benefit of going to college has go up

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