If all economists are equally skilled and trained, they all either consult for business or teach in academic institutions, and business firms pay an average of $110,000 per year to economists, then we would expect
a. academic economists to make $110,000 a year also if the jobs are equally desirable and have similar perks.
b. academic economists to make less than $110,000 because business can afford to pay more than can colleges and universities.
c. academic economists to make more than $110,000 because business and economics courses are in far greater demand than many other courses.
d. no particular pattern of compensation between the two groups because the pay would depend on the supply and demand in each market.
Answer: a. academic economists to make $110,000 a year also if the jobs are equally desirable and have similar perks.