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Suppose there are 2 types of individuals:
a. "Type 1": PV of earnings with HS diploma :135.
PV of earnings without diploma:100.
b. "Type 2" : PV of earnings with diploma : 120.
PV of earnings without diploma : 100. The PV of the costs of a HS diploma is 22 for both types.
Question 2). a researcher sees only the following data:
Education level Average earnings
No HS diploma 100
HS diploma 135
Based on this , he concludes that a HS diploma raises earnings by 35(or a net of 35-22=13) on averages. Is this logic flawed? Why or Why not?
Question 3) Suppose the government thinks the average benefits of a HS diploma are 35, while the costs are only 22. They begin a program that pays a prize of 3 for all who get a HS diploma. Now which types will get a HS diploma? What is the benefit of the program for each type?
There are many common threads running through and linking all of these assignments, write about the commonalities which link all of these topics together when doing business overseas.
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