Monica Phiniezy
10/22/11
Week 1 Case Assignment
BUSN 6120

#7
A. If you look at the opportunity cost of pursuing a MBA you have to consider both the explicit and implicit costs. Explicit cost would be what you actually pay out of pocket to attend school. So it is only rationale to pursue an MBA if you can afford it. Implicit cost would be what other activities are you giving up to pursue the MBA this could a vacation, getting married, or pursuing a different degree. For me it is a little difficult to say with implicit costs whether it is rationale to pursue a degree it just depends on what the individual is willing to sacrifice.

If you look at the net present value you have to consider if the money you spend will be worth it in the long run. For example if you spend $300,000 on the degree and only land a job paying $35,000 then the net present value is not good. So if the future earnings will exceed the initial investment then yes it id rational to pursue the degree.

B. If the salaries of managers without degrees increased you may have less students trying to enroll in the MBA program. But I think that would depend on if the increase would place them at the same salary level as the starting salary for managers with MBA degrees. It also may depend on the individual persons desired income level the increase even if it was not as much as the starting salary may be enough for some.

#14 A. Tara’s accounting cost the first year would be $16,000. Based on the information given Tara is giving up a job making $56,000 a year and she will only profit $40,000 so $56,000-$40,000=$16,000. The implicit cost is that Tara missed out on the opportunity to make more money on her job.

#2 A. If the price of input A increases then the supply of Good X would decrease. B. If the excise tax of $1 is imposed then the supply of Good X will decrease C.