Question

6. What is the stopping rule for choosing one's years of schooling?

A. End one's schooling when the return from more schooling is zero.

B. End one's schooling when the cost of one more year of schooling is zero.

C. End one's schooling after college.

D. End one's schooling when the rate of return to one more year of schooling equals the worker's rate of discount.

E. End one's schooling when the worker's rate of discount equals zero.

Answer 1

The stopping rule for choosing one's years of schooling compares the rate of return of one additional year of a schooling with worker's rate of discount and states that optimal number of years of schooling is that number corresponding to which rate of return of one additional year of schooling equals the worker's rate of discount.

The person concerned should end schooling on reaching this number as per the stopping rule.

Hence, the correct answer is the option (D).