Suppose you are choosing a career path with two options: Either you study at university before entering the labour market, or you enter the labour market directly. You only live for two periods. If you study, you incur tuition fees of 10,000 in the first period, but earn 100,000 in the second. If you enter the labor market directly, you earn 10,000 in the first period and 75,000 in the second.

a) What is the discount rate that makes you monetarily indifferent between studying and entering the labor market directly? Explain your reasoning.

b)In light of the schooling model, give examples of policies that the government can use to boost attendance in higher education.