at a university faculty meeting, a proposal was made to increase health care benefits for new faculty to keep pace with the high cost of health care. true or false: in the long run, this increase in health care benefits will make faculty positions more attractive than other jobs. (hint: consider how the indifference principle applies to this occupation in the long run.) true false

According to the indifference principle, a movable asset will eventually not care where it is employed in the long run. In other words, the asset will profit equally wherever it goes.

The indifference principles suggest that wages will adapt to return the labor market to equilibrium. In this instance, a rise in a non-salary benefit (such as housing or health care benefits) elevates the teaching post above other professions in terms of attractiveness. On the other hand, as more people aspire to become professors, the labor pool for this industry will grow, which will eventually result in lower compensation.

At the same time, when people in other businesses (or people who would have entered other industries) seek employment as faculty members, the supply of labor in those other industries will decline. As a result, other industries' pay increase.

New faculty members' salaries will keep declining until they are competitive with other occupations. The labor supply for professor posts will eventually run out because there is no longer any incentive for people to pursue careers as college teachers.

Because the labor supply is no longer growing, wages are no longer falling. Despite the rise in perks, wages have moved lower at this new equilibrium, making faculty jobs just as desirable as other jobs.

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