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Suppose That a Technological Innovation Causes the Price of Capital

Question 34

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Suppose that a technological innovation causes the price of capital to decrease and that,in turn,this causes the demand for college graduates to increase and the demand for high school graduates to decrease.Use human capital theory to predict the effect of the technological innovation on college enrollment rates of 18-year olds.Explain using either the present value method or the internal rate of return method.

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The increase in demand for college gradu...

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