LABOR ECONOMICS (LL+ACCESS)
8th Edition
ISBN: 9781264909339
Author: BORJAS
Publisher: MCG
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Question
Chapter 6, Problem 15P
a)
To determine
The effect of preferences, costs, and individual-specific returns to education on optimal amount of schooling.
b)
To determine
The reason for opting very little schooling by someone who faces a very steep returns to education.
c)
To determine
The annual return to an additional year of schooling.
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Refer to the following diagram for questions
%! 1
E₁
D₁
E₂
S
D2
Education
If D₁ is this individual's investment demand curve, then the optimal amount of education
a) is E₁ from society's standpoint.
b) is E₂ from society's standpoint.
c) is E₁ from this individual's standpoint.
d) cannot be determined without further information.
Compared to D₁, a person whose demand curve is given by D₂ will likely obtain
a) more education and receive higher earnings.
b) more education and receive lower earnings.
c) less education and receive higher earnings.
d) less education and receive lower earnings.
Age-earning profiles help analyze individuals' choices of educational attainment. Suppose you are
considering working or attending a graduate program after your bachelor's degree.
a) Explain how you would make a rational decision. Include a diagram.
b) Discuss the potential challenges female individuals may face in the above decision. Show
them in graphs.
Identify some essential elements common to any rational decision-making process?
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