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Eco 101 Homework Assignment 4, Assignments of Microeconomics

The homework assignment for eco 101, including questions about definitions related to economics, education funding, costs and benefits of attending college, opportunity cost of obtaining education, occupational crowding, statistical discrimination, and the relationship between education and earnings.

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Pre 2010

Uploaded on 08/18/2009

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Eco 101
Homework Assignment 4
The due date for this assignment is Thursday March 10.
Instructions: Complete the following questions and turn in your solutions at the end of the class
lecture on the date due. Remember to include your name and student number on your submitted
document.
Question #1 – Definitions
i. Direct cost
ii. Indirect cost
iii. Inefficiency
iv. Investment in Human capital
v. Human Capital
vi. Minority
vii. Prejudice
viii. Discrimination
ix. Statistical discrimination
x. Occupational crowding
xi. Affirmative action
xii. Tokenism
Question #2 – Education and provision of Public Education
- Suppose the Inner City has a property tax base of $40,000 per student, while the Suburb has a
property tax based of $200,000 per student. Suppose the tax rate for education is 4%.
i. What is the amount of money available for educating students in the Inner City?
ii. What is the amount of money available for educating students in the Suburb?
iii. What is the difference in support for students in the Inner City as compared to
students in the Suburb?
iv. What tax rate would be required in the Inner City to make the funding per student the
same as in the Suburb?
v. What is likely to happen if the tax rate in the Inner city did rise to 20% (20% is the
answer you should have gotten in iv)?
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Eco 101

Homework Assignment 4

The due date for this assignment is Thursday March 10.

Instructions: Complete the following questions and turn in your solutions at the end of the class lecture on the date due. Remember to include your name and student number on your submitted document.

Question #1 – Definitions i. Direct cost ii. Indirect cost iii. Inefficiency iv. Investment in Human capital v. Human Capital vi. Minority vii. Prejudice viii. Discrimination ix. Statistical discrimination x. Occupational crowding xi. Affirmative action xii. Tokenism

Question #2 – Education and provision of Public Education

  • Suppose the Inner City has a property tax base of $40,000 per student, while the Suburb has a property tax based of $200,000 per student. Suppose the tax rate for education is 4%. i. What is the amount of money available for educating students in the Inner City? ii. What is the amount of money available for educating students in the Suburb? iii. What is the difference in support for students in the Inner City as compared to students in the Suburb? iv. What tax rate would be required in the Inner City to make the funding per student the same as in the Suburb? v. What is likely to happen if the tax rate in the Inner city did rise to 20% (20% is the answer you should have gotten in iv)?

Question #3 – Education, direct costs, indirect costs, and net benefits a) - Consider the following diagram discussed in class:

Annual Earnings ($/ per year)

Age

D

B

C

A

65

0

(^18 )

Earnings with a bachelors degree

Earnings with only a high school degree

i) Which area represents the direct costs of going to college? ii) Which area represent the indirect costs of attending college? iii) Which area(s) represent the total earnings from attending college? iv) Which area(s) represent the total earnings from not attending college? v) What area represents the net benefit in earnings from attending college?

b) Consider the following information for someone who is considering whether or not they should go to college to get a bachelors degree:

  • Cost of college (tuition, books, fees, etc) = $10,
  • Wage earnings if not going to school:
    • age 19-22 (4yrs) = 15,
    • age 23-32 (10 yrs) = 25,
    • age 33-65 (33 yrs) = 30,
  • Wage earnings if does go to college (assume full time studies and does not work while enrolled in university)
    • age 23-32 (10 yrs) = 30,
    • age 33-65 (33 yrs) = 45,

With respect to the information given in this question plus the graph in part a), calculate the following: i) what is the value of area A? ii) what is the value of area B? iii) what is the value of area C? iv) what is the value of area D? v) What is the net benefit from going to college?