Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Economics


Home >> Microeconomics

Consider a simplified version of the data described above. Shelly decided study economics and now is about to choose the school. She has narrowed her options to two alternatives. She can either go to Purdue or the University of Chicago. Shelly lives two periods. In the first, she gets an education. In the second, she works in the labor market.

If Shelly attends Purdue, she will spend $15,000 on education in the first period and earn $472,000 in the second period. If she attends the University of Chicago, she will spend $40,000 on education in the first period and then earn $500,000 in the second period.

a. Suppose Shelly can lend and borrow money at a 5 percent annual rate. Which school will she choose?

b. What if she can lend and borrow money at a 15 percent rate of interest? Will she choose a different option? Why?

c. Suppose the University of Chicago raise their tuition so that it now costs Shelly $60,000 to attend. Which school will Shelly pursue if her discount rate is 5 percent?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91240308

Have any Question?


Related Questions in Microeconomics

Question go to the internet and find a news article that

Question: Go to the internet and find a news article that discusses a potential positive or negative externality. Summarize key points in your initial discussion post. Be sure to use the concepts and frameworks we are co ...

Question in 1999 brazil was forced to devalue the real by

Question: In 1999 Brazil was forced to devalue the real by almost 50%, and in 2002 Argentina was forced to devalue the peso by almost 50%. According to the static model, that would boost net exports and raise GDP. Howeve ...

Question if we plot michelles gpa as a function of her

Question: If we plot Michelle's GPA as a function of her leisure time, we see that her GPA ?rst rises with leisure (taking some time o? improves her performance) but eventually decreases with leisure. 1. Plot the relatio ...

Question consider a manufacturer that sells its product to

Question: Consider a manufacturer that sells its product to a retailer who resale it to final consumers. The two firms do not have any production costs. The market has 100 consumers of type A and 80 consumers of type B. ...

Question consider a bottled water market in which only two

Question: Consider a bottled water market in which only two firms are operating: Canyon Water and Lake Water. Assume zero cost to produce bottled water. The market demand is given by the following schedule. Price Quantit ...

Question congress has the choice of spending 50 billion on

Question: Congress has the choice of spending $50 billion on either space exploration or increased aid to education. Outline the arguments that would lead you to conclude which type of expenditure is more likely to incre ...

Question suppose p 20 - 2q is the market demand function

Question: Suppose P = 20 - 2Q is the market demand function for a local monopoly. The marginal costis 2Q. The local monopoly tries to maximize its profits by equating MC = MR and charging auniform price. What will be the ...

Question 1is it to an employees advantage to enjoy the

Question: 1.Is it to an employee's advantage to enjoy the lower turnover rates that unionization seems to include? provide specific example 2. Why are union officials likely to oppose flexible work hours and other innova ...

Question very time we have to make a choice we are faced

Question: Very time we have to make a choice we are faced with an opportunity cost. Using an example in your professional life, identify a situation where you were presented with a choice, the opportunity cost of the cho ...

Question the material in this chapter did not focus on

Question: The material in this chapter did not focus on different methods of predicting inflation because the core rate has changed very little since 1982. The biggest change has been 1.1%, and the average change has bee ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved