It is estimated that over 100,000 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, when is it rational for an individual to pursue an M.B.A. degree.

When the net present value of attending graduate school is at least $100,000.

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 decreased by 20 percent?

There is no way of telling.