Question: Human Capital Investments. Suppose that the marginal cost of an additional unit of human capital is given by \(M C=400\) and the marginal benefit is given by \(M B=800-25 H C\), where \(\mathrm{HC}\) is the number of units of human capital.

1. Graph $M B$ and $M C$ as a function of $H C$. Calculate the optimal level of human capital investment, \(H C^{*}\).
2. The growing importance of computer skills in today’s economy leads firms to place a greater premium on human capital investments. As a result, the marginal benefit of an additional unit of human capital increases to \(M B=800-20 H C\). Re-answer part (a).

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