User Account

All Pages

Question 1, economics, Microeconomics

Assignment Help:
You are considering whether or not to go to graduate school. Well… there are many things to consider, of course, such as the type of job you would thus get, the opportunity to live in a city or town whose existence you might have disregarded entirely otherwise and, most importantly, the sheer and ecstatic joy of learning! (By now, you may be wondering what I am on and where you can get some – search no further than Durian, a pungent fruit available in Chinatowns across NYC). All right, all this is well and good, but there is also a monetary aspect… Financially, would it be a sound decision? Let’s see.

- The graduate program you are looking at lasts four years;
- The school forbids you to work during the time of the program (to leave all your time to studying), but they will give you 10 000$ a year to live on
- The program will allow you to get a job paying 70 000 a year when you get out.
- If you do not go to graduate school (assuming you are just graduating from college), you have a job lined up paying 45 000.
- Your discount rate is 10% (0.1).

a) Is this a good idea financially? That is, does the higher wage when you get out ever compensates for the lower income during grad school? If so, how many years must you work on the job after graduation in order to come up ahead? (don’t forget to discount the future!)
b) What if you have another option: A school that lends you the money, but promises a job at 90 000$ when you get out. Let’s say that the school lends you the 10 000$ a year instead, and that repayment is due whenever you want (say, within 20 years), but as soon as you graduate, the loan starts accruing interest at a rate of 10% a year (so you owe 40 000$ on the day of graduation, 44 000$ the next year if you don’t pay anything, etc.). In this case, how many years do you need at 90 000$ for you to come out ahead? If you do come start coming out ahead after a while, do you do so faster than at the free school?
c) We talked to some extent about the issue of debt peonage in class. Even if you come out ahead eventually with the deal in b), is it constraining in away in terms of life plans? If so how?
d) So far, I have assumed that you have all the information (job-wise, etc.) in advance and that you know the information for certain. Of course, life is not so simple and no job is ever entirely guaranteed… So in this case, on what would you base your decision (keeping it on financial considerations for now)? How solid of a basis do you feel this is? Does taking uncertainty into account change the assessment of whether you should take a loan to study or not? If so, how does it change it?

Related Discussions:- Question 1, economics

What is the difference between scarcity and shortage, What is the differenc...

What is the difference between 'scarcity' and 'shortage'?  'Scarcity' and 'shortage' have dissimilar definitions. In reality, when most of the goods and resources are scarce go

Supply, Case 1: The market for drugs Supply, demand, and equilibrium: ...

Case 1: The market for drugs Supply, demand, and equilibrium: The market for drugs. Suppose the market for drugs is a perfectly competitive market. Let the supply curve

What is marvins optimal bundle, Marvelous Marvin spends his money on muffin...

Marvelous Marvin spends his money on muffins (m) and a composite good (c) (whose price you may assume is $1 throughout this problem). Marvin's utility is U = m + c and his income (

Production, Ask questA rmuses 4 inputs to produce 1 output. The production...

Ask questA rmuses 4 inputs to produce 1 output. The production function is f (x 1 ; x 2 ; x 3 ; x 4) =minfx 1 ; x 2 g + minfx 3 ; x 4 g.ion #Minimum 100 words accepted#

Cost push inflation, what are the solutions to cost push inflation

what are the solutions to cost push inflation

Methodology of econometrics, Methodology of econometrics involving three st...

Methodology of econometrics involving three stages 1. Specification of the model using a specific stochastic equation, together with a priori theoretical expectations about th

Find the equilibrium price and quantity, 1. Assume that the market for whea...

1. Assume that the market for wheat is perfectly competitive. Suppose the demand curve for wheat is given by: QD = 200 – 2P where QD is the quantity demanded, in bushels, and P i

Approaches in attaining higher satisfaction, What are the 2 approaches in ...

What are the 2 approaches in which results into a higher satisfaction?

What are the basic economic institutions, What are the basic economic insti...

What are the basic economic institutions? There are two fundamental economic institutions which have been so far used into the real world are as: a. Market economic institut

International Buffer Stock Agreements, #question about International Buffer...

#question about International Buffer Stock Agreements, define International Buffer Stock Agreements with briefly. International Buffer Stock Agreements seek to stablise the commod

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd