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Consider an employee who does not receive employer-based health insurance

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15 Consider an employee who does not receive employer-based health insurance and must divide her $700 per week in after-tax income between health insurance and ?other goods?. Draw this worker?s opportunity set if the price of health insurance is $100 per week and the price of ?other goods? is $100 per week. On the same graph, illistrate how the opportunity set would change if the employer agreed to give this employee $100 worth of health insurance a week (under current tax laws, this form of compensation is nontaxable). Would this employee be better or worse off if, instead of the health insurance, the employer gave a $100 per week raise tht was taxable at a rate of 25%? Explain

 

Paper#26443 | Written in 18-Jul-2015

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