5 Returns to Education [35 points] 3. Imagine that the cost of school is given by C(Si)=cSi2. If there are no financing constraints (i.c. parents can spend as much as they want on school, and if they have to borrow they can Suppose that the returns to education is given by the equation: pay it back when the child carns the returns yi=aiSi For the next set of questions you can assume that the parameter c=1. person i 's carnings yi is the product of their ability ai and their years of schooling Si. 5 Returns to Education [35 points] 3. Imagine that the cost of school is given by C(Si)=cSi2. If there are no financing constraints (i.c. parents can spend as much as they want on school, and if they have to borrow they can Suppose that the returns to education is given by the equation: pay it back when the child carns the returns yi=aiSi For the next set of questions you can assume that the parameter c=1. person i 's carnings yi is the product of their ability ai and their years of schooling Si