than the more than $25,000 estimated as the average cost in 2022 for a year of college at a public university. The

result of these costs is that student loan debt topped $1.3 trillion this year.

Despite these disheartening figures, the value of a bachelor’s degree has never been higher. How do we explain this?

This chapter will tell us.

In a market economy like the United States, income comes from ownership of the means of production:

resources or assets. More precisely, one’s income is a function of two things: the quantity of each resource one

owns, and the value society places on those resources. Recall from the chapter on Production, Costs, and

Industry Structure, each factor of production has an associated factor payment. For the majority of us, the

most important resource we own is our labor. Thus, most of our income is wages, salaries, commissions, tips

and other types of labor income. Your labor income depends on how many hours you work and the wage rate
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