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Exercise 2.2

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Jeff McNeill

on 10 January 2013

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Transcript of Exercise 2.2

a. What is the cost
of staying in school? Lost income from work,
inability to pursue activities other than school,
loss of personal freedom,
need to spend time doing homework,
etc. b. What is the cost of
dropping out of school? Lower future income,
limited social contacts,
inability to attend college,
lost future opportunities, etc.) c. What incentives encourage
people to stay in school? (Higher future incomes,
a wider range of job opportunities,
the opportunity to attend college,
expanded social opportunities,
etc.) d. How does the American economic system encourage people to graduate from high school? (The U.S. economy presents a wide range
of opportunities for employment and entrepreneurial activity.
Graduating from high school is a minimum qualification for many of these opportunities.
Opportunities for high school dropouts are far more restricted. e. Is going to high school voluntary, or are
young people required to go to high school? (After age 16, in most states,
attending high school is voluntary.) f. Why do some students choose
to drop out of school? (They must believe that the costs
of staying in school are greater than the
They may desire the immediate
rewards of income from a job, or freedom,
or they may want to be of immediate help
to their families.) g. Why do most students choose
to stay in high school and graduate? (They must believe
that the benefits of staying in school—including
higher future income and expanded
future opportunities—outweigh
the costs of forgone income and restricted
personal freedom in the present.) h. What are the future
consequences of a decision
to drop out of school or stay in school? (Dropping out of school will limit future
staying in school will expand
them.) Median income of: A High School Dropout: $23,608 A High School Graduate: $32,552 A College Graduate: $53,300
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