Question

Explain why college students are willing to pay for classes? Include a discussion of the ten economic principles in this context.

Answer 1

Let me first point out the 10 economic principles. Then I will come to the required explanation with reference from these.

1) Everyone faces trade-off

2) Cost of something is what is given up to get it

3) Rational people think at margin

4) People respond to incentive

5) Trade can make everyone better off

6) Markets are good way to organize economic activity

7) Government can sometimes improve market outcomes

8) Production of goods and services in a country raises standard of living.

9) Prices rise when government print more money

10) Society faces short term trade off between inflation and unemployment.

As, I mentioned at point 4, people respond to incentive. The biggest incentive for college students to pay for classes is that after the completion of course, the students will have gained some knowledge and earned a degree. This will help them to get a job and earn money. Thus there is an incentive. Also, there is a cost attached to obtaining knowledge via class. This cost is the payment of money at current time. Following from point 3, the marginal benefit from college class is supposedly higher than marginal cost for obtaining in the long term.

Point 5 says trade makes people better off but this requires specialization. Specific skills can be obtained by attending classes. Point 8 mentions the importance of production. This also requires certain amount of skill and technological advancement that can be obtained through education. A rational individual wants to be better off and have a higher standard of living.

Thus i feel college students are willing to pay for classes.