It is estimated that over 900 students will apply to top 30MBA program in the U.

Question

It is estimated that over 900 students will apply to top 30MBA program in the U.S. this year. *What would happen to the number of applicants if thestarting salaries of managers with MBA degrees remained constantbut salaries of managers without such degrees increased by 15percent? why? Will rate high! Thanks for your time. It is estimated that over 900 students will apply to top 30MBA program in the U.S. this year. *What would happen to the number of applicants if thestarting salaries of managers with MBA degrees remained constantbut salaries of managers without such degrees increased by 15percent? why? Will rate high! Thanks for your time.

Explanation / Answer

Those investing in pursuing MBAs are often doing so after making a careful calculation that the tradeoff of the investment is that they will receive higher pay afterwards.  If an event happens so that salaries of managers with MBA degrees remain constant, while salaries of those without degrees increase, then the value of the MBA (over not having one) decreases.  Hence, fewer will choose to pursue it.

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