9. Costs and benefits of a college education Suppose the following graph shows t
ID: 1213258 • Letter: 9
Question
9. Costs and benefits of a college education
Suppose the following graph shows the earnings trajectory of college-educated workers (orange line) and of workers with only a high school diploma (blue line), through age 34.
Use the grey quadrilateral (star symbols) to shade the area representing the direct costs of attending college for four years. Then use the purple quadrilateral (diamond symbols) to shade the area representing the opportunity cost of attending college for four years rather than entering the work force immediately after completing high school. Finally, use the green quadrilateral (triangle symbols) to shade the area representing the difference in earnings between college graduates and high school graduates between the ages of 22 and 34.
Hint: Be sure that the coordinates of the end points of the quadrilaterals are exactly the same as the coordinates of the areas they are to cover.
The previous diagram shows that the benefit in earnings from going to college is , while the total cost of going to college is .
It is difficult to measure nonmonetary benefits of various jobs, but students who want to maximize monetary benefits want to invest in their own human capital.
College 100 T 80 Direct Costs 60 40 High School 3 20 O Opportunity Cost 0 O -20 40 u -80 -100 18 20 22 2426 2830 32 34 AGE (Years)Explanation / Answer
The previous diagram shows that the benefit in earnings from going to college is 60 , while the total cost of going to college is 40 .
It is difficult to measure nonmonetary benefits of various jobs, but students who want to maximize monetary benefits would want to invest in their own human capital.
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