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Author Question: What are two reasons why employees would prefer for their employer to pay for their health insurance ... (Read 131 times)

kellyjaisingh

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on: Jun 29, 2018
What are two reasons why employees would prefer for their employer to pay for their health insurance rather than receiving increased wages and paying for their own health insurance?
 
  What will be an ideal response?

Question 2

Which of the following would cause the equilibrium price of ketchup to increase and the equilibrium quantity of ketchup to decrease?
 
  A) an increase in the price of mustard, a substitute for ketchup
  B) a decrease in the price of tomatoes
  C) an increase in the price of tomatoes
  D) an increase in the price of french fries, a complement for ketchup


ladyjames123

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Reply #1 on: Jun 29, 2018
Answer to Question 1

1. The wage an employer pays employees is taxable income to the employees but the money an employer spends to buy health insurance for employees is not taxable.
2. Insurance companies are typically willing to charge lower premiums for group insurance, particularly to large employers, because risk pooling is improved and adverse selection and moral hazard problems are lower when compared with individual policies.

Answer to Question 2

C


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