Economics of Public Issues (20th Edition) (The Pearson Series in Economics)
20th Edition
ISBN: 9780134531984
Author: Roger LeRoy Miller, Daniel K. Benjamin, Douglass C. North
Publisher: PEARSON
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Question
Chapter 22, Problem 4DQ
To determine
The probability of nonpayment of student loan, if the student fails.
Concept introduction:
Cost:
Cost refers to a particular amount that is incurred by a firm or an individual to acquire an asset or a service.
Explanation:
Given,
J and O incur $25,000 in a student loan.
- According to the given case, J has completed his graduation, but O fails to graduate. This means that J would have a highly paid job as compared to O, based on the education level.
- The one who has a higher paid job would have more chances of repaying the loan, as compared to the one who has a low paid job. Thus, O has more probability of defaulting the loan.
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Chapter 22 Solutions
Economics of Public Issues (20th Edition) (The Pearson Series in Economics)
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