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Questions 1. Individuals' decision to attend school could be seen as a human capital investment decision. Consider the decision to complete secondary education depicted in
Questions 1. Individuals' decision to attend school could be seen as a human capital investment decision. Consider the decision to complete secondary education depicted in Figure 8.5 below, and answer the following questions. Fig. 8.5 Earnings Secondary Primary Forgonen Age Direct FIGURE - Determinants of the Private Returns to Schooling What is the difference between direct and indirect costs of education? (1 marks) b. Why are private benefits shown as the grey area above the primary education curve and below the secondary education curve as opposed to total earnings (.e. the area between the secondary education curve and the horizontal axis)? (1 marks) c. Why would we need to calculate the Net Present Value (NPV) to make a decision on whether to attend or not secondary school? (1.5 marks) d. Assume you have computed the NPV, what result would make you decide to complete secondary education? Why? Questions 1. Individuals' decision to attend school could be seen as a human capital investment decision. Consider the decision to complete secondary education depicted in Figure 8.5 below, and answer the following questions. Fig. 8.5 Earnings Secondary Primary Forgonen Age Direct FIGURE - Determinants of the Private Returns to Schooling What is the difference between direct and indirect costs of education? (1 marks) b. Why are private benefits shown as the grey area above the primary education curve and below the secondary education curve as opposed to total earnings (.e. the area between the secondary education curve and the horizontal axis)? (1 marks) c. Why would we need to calculate the Net Present Value (NPV) to make a decision on whether to attend or not secondary school? (1.5 marks) d. Assume you have computed the NPV, what result would make you decide to complete secondary education? Why
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