Homework answers / question archive / Question 5  Mary earns $15 per hour, Paul earns S18 per hour, and Peter earns $22 per hour

Question 5  Mary earns $15 per hour, Paul earns S18 per hour, and Peter earns $22 per hour

Economics

Share With

Question 5 

Mary earns $15 per hour, Paul earns S18 per hour, and Peter earns $22 per hour. Peter has three years of college, Paul has two, and Mary has one. The difference in their choice of years of education is due completely to different discount rates. How much can the available information reveal about each person's discount rate? 

Question 6 

Marie is about to choose a career path. She can either become a certified public accountant or a high school teacher. Marie lives two periods. In the first, she gets an education. In the second. she works in the labor market. If Marie becomes a certified public accountant, she will spend $45,000 on education in the first period and earn $500.000 in the second period. If she becomes a high school teacher. she will spend S30,000 on education in the first period and then earn $400.000 in the second period. Suppose Marie can lend and borrow money at a 5 percent rate of interest between the two periods. 
a) Which career will she pursue? 
b) What if she can lend and borrow money at a 15 percent rate of interest?