7. It is estimated that over 90,000 students will apply to the top 30 M.B.A.

programs in the United States this year.

a. Using the concept of net present value and opportunity cost, explain when it is rational for an individual to pursue an M.B.A. degree.

b. What would you expect to happen to the number of applicants if the starting salaries of managers with M.B.A. degrees remained constant but salaries of managers without such degrees increased by 15 percent? Why?