Y5

Job Opportunities, Barriers to Entry, & Opportunity Costs: (15 points) Maria is a student considering a part-time job for one year in either massage therapy or nutrition advising. Becoming a nutritionist requires a $500 "N-certification" and it pays $30 per hour. It also requires 20 hours of unpaid training work before any money can be made. Maria is already a massage expert, but legally she requires a massage certification to work. This "M-certification" costs $4000 and the job pays $50 per hour. Ignore the time required to take either certification exam, assume she will never violate either requirement, and assume there is no other opportunity to make money. Maria always values all leisure at $10 per hour and derives 1 unit of utility per $1 for any amount of dollars and any level of utility. Also assume she has only 10 hours per week to use, 50 total weeks to work, and cannot do either of these jobs ever again after these 50 weeks are over because she will graduate and become an investment banker addicted to stress and spreadsheets for the rest of her life. These certification exams are often called "barriers to entry" for these professions. Who has incentives to create or maintain these, and how do they benefit from them? b) If Maria can afford to pursue either one of these options but will never do both, what will she do? Provide a precise quantitative justification and briefly explain the logic. Do not consider anything besides money and the given monetary value of leisure.Job Opportunities, Barriers to Entry, & Opportunity Costs: (15 points) Maria is a student considering a part-time job for one year in either massage therapy or nutrition advising. Becoming a nutritionist requires a $500 "N-certification" and it pays $30 per hour. It also requires 20 hours of unpaid training work before any money can be made. Maria is already a massage expert, but legally she requires a massage certification to work. This "M-certification" costs $4000 and the job pays $50 per hour. Ignore the time required to take either certification exam, assume she will never violate either requirement, and assume there is no other opportunity to make money. Maria always values all leisure at $10 per hour and derives 1 unit of utility per $1 for any amount of dollars and any level of utility. Also assume she has only 10 hours per week to use, 50 total weeks to work, and cannot do either of these jobs ever again after these 50 weeks are over because she will graduate and become an investment banker addicted to stress and spreadsheets for the rest of her life. These certification exams are often called "barriers to entry" for these professions. Who has incentives to create or maintain these, and how do they benefit from them? b) If Maria can afford to pursue either one of these options but will never do both, what will she do? Provide a precise quantitative justification and briefly explain the logic. Do not consider anything besides money and the given monetary value of leisure