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2. Human Capital [20 points] Suppose that you are graduating from college and are considering whether to pursue a two-year master's degree in economics at
2. Human Capital [20 points] Suppose that you are graduating from college and are considering whether to pursue a two-year master's degree in economics at HKU. The tuition for the master's program is 200,000 HKD per year. You expect to earn 500,000 HKD per year if you start working now. You expect to retire 40 years from now. Suppose that your salary will not grow over time, there is no inflation and there is no discounting of future earnings. (a) What is the opportunity cost of pursuing the master's degree in economics at HKU? (b) Suppose that the master's degree in economics at HKU will increase your annual salary by 100,000 HKD. What would be your total benefit of pursuing the degree? (c) Suppose you only care about monetary returns, should you pursue the master's degree in economics at HKU? Explain why. (d) What other factors are missing from the analysis of this problem? How would they change your decision
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