b Suppose musical conservatories raise their tuition so that it now costs

# B suppose musical conservatories raise their tuition

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(b) Suppose musical conservatories raise their tuition so that it now costs Debbie \$60,000 to become aconcert pianist. What career will Debbie pursue if the interest rate is 5 percent? 6-4. Suppose the skills acquired in school depreciate over time, perhaps because technological change makes the things learned in school obsolete. What happens to a worker’s optimal amount of schoolingif the rate of depreciation increases? 6-6. Suppose Carl’s wage-schooling locus is given byYears of SchoolingEarnings9\$18,50010\$20,35011\$22,00012\$23,10013\$23,90014\$24,000Derive the marginal rate of return schedule. When will Carl quit school if his discount rate is 4 percent? What if the discount rate is 12 percent?
Schooling Earnings MRR 9 \$18,500 10 \$20,350 10.0 11 \$22,000 8.1 12 \$23,100 5.0 13 \$23,900 3.5 14 \$24,000 0.4 Carl will quit school when the marginal rate of return to schooling falls below his discount rate. If his discount rate is 4 percent, therefore, he will quit after 12 years of schooling; if his discount rate is 12 percent, he will quit after 9 years of schooling.