An individual will choose the optimal amount of schooling so that the return to an additional year of school equals:

Question

Quizplus · Accepted Answer

The optimal amount of schooling is chosen when the return to an additional year of school equals both the marginal cost of an additional year of schooling (B) and the expected return from investing the money elsewhere, such as in a bank (D). This ensures that the individual is making an economically rational decision by comparing the benefits of further education to its costs and to alternative investments.

An Individual Will Choose the Optimal Amount of Schooling So