Question

In: Economics

1. (10) Evaluate each of the following statements – how does the situation affect the incentive...

1. (10) Evaluate each of the following statements – how does the situation affect the incentive to invest in a college degree? Why?

a. People who going into craft training programs such as carpentry or plumbing are making high wages.

b. A husband is planning to stay at home to raise his children.

c. Two siblings have entered college – one is a straight-A student with plenty of scholarships while the other maintained a 1.5 GPA in high school and must pay for most of their education out of pocket or through loans.

d. A college athlete receives a full scholarship to play hockey for the university he attends.

e. A 60-year old worker is deciding whether or not to pursue an MBA.

Solutions

Expert Solution

1. (10) Evaluate each of the following statements – how does the situation affect the incentive to invest in a college degree? Why?

Solution :

a. People who going into craft training programs such as carpentry or plumbing are making high wages. Answer This situatiin will demotive people to get into a college for degree. If carpentry and plumbing profiles are offering better job and income prospects people will shift their mindset towards those profession . After all people go to college to get a degree which will help them to land at a job. but if degree does not guarantee you good job and good pay, there is no incentive for the people to invest their money in such useless degrees.

b. A husband is planning to stay at home to raise his children. Answer : This situation will motivate the husband to invest in college degree. As he is deciding to stay at home , he will definitely get some free time which he would like to invest in upgrading his eduacation. So, he will like to invest his time and money in some prestigious degrees.

c. Two siblings have entered college – one is a straight-A student with plenty of scholarships while the other maintained a 1.5 GPA in high school and must pay for most of their education out of pocket or through loans. Answer : The person with scholarships will continue his college because he do not have to pay the fees, so there is no negative returne for him. but the person with only 1.5 GPA will cnot like to continue his college life as he will have to pay the fees out of his own pocket. Also, 1.5 GPA makes him an average student so he would not have a strong faith that the college degree will provide him a good job. Thus he will be demotivated to invest in a college degree

d. A college athlete receives a full scholarship to play hockey for the university he attends. Answer : This person will be motivated to invest in the college degree not for the purpose of getting degree but because of the scholarship that he he is receiving which is giving him a chance to participate in hochey sport for the university which is definetely a golden opportunity for any athlete.


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