a) Harry and Hermione are both deciding whether to attend school or not. They both face the same discount rate, but they have di erent abilities. Hermione is better at school and so her return on schooling is higher than Harry's at every level. Draw a graph with interest rate on the y-axis and years of schooling on the x-axis that illustrates why Harry and Hermione would choose different levels of schooling. Explain your graph.
b) Policy makers decide, if they want to close the wage gap between Harry and Hermione, they need only ensure Harry obtains the same amount of schooling as Hermione, do you agree or disagree with this policy? Explain.