(a) After HSC level a student can go to University or he can enter in the labor market-which criteria

determine these alternative decisions? Explain.

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(b) Samira is about to choose a career path. She has narrowed down her options to two alternatives.

She can become either a banker or a pilot. In the first, she gets an education. In the second, she

works in the labor market. If Saira becomes a banker, she will spend TK 400000 directly on

education in the first period and also has foregone earnings of TK.100000 and earns Tk.

200,000,Tk. 250000 and Tk. 300000 in the next three periods .If she becomes a pilot, she will

spend Tk. 500000 for a pilot training program with an opportunity cost of Tk. 100000 and then

earn Tk.300,000, Tk. 320000 and Tk. 350000 in the next three periods.

Suppose, Samira can lend and borrow money at a 5% rate of interest among the periods.

i) Which career will she pursue?

ii)What if she can lend and borrow money at a 10% rate of interest? Will she choose a different

option? Why?

iii) Suppose, a pilot training program has become less expensive now and it will cost TK.

350000 to become a pilot. What career will Samira pursue if the interest rate is 10%?