Business, 19.03.2020 23:34 Hjackson24

Imagine that the U. S. Congress, recognizing the importance of being well dressed, started giveing preferential tax treatment to "clothing insurance." Under this new type of insurance, you would pay the insurance company an annual premium, the insurance company would than pay for 80 percent of your clothing expenses (you pay the remaining 20 percent), and the tax laws would partly subsidize your insurance premiums.

a. How would the existence of such insurance affect the amount of clothing that people buy? How would you evaluate this change in behavior from the standpoint of economic efficiency?
b. Who would choose to buy clothing insurance?
c. Suppose that the average person now spends $2,000 a year on clothes. Would clothing insurance cost more or less than $2,000? Explain.
d. In your view, is this congressional action a good idea? How would you compare this idea with the current tax treatment of health insurance?

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 06:00

If you miss two payments on a credit card what is generally the penalty

Answers: 1

Answer

Business, 22.06.2019 07:40

Xyz corporation has provided the following data concerning manufacturing overhead for july: actual manufacturing overhead incurred $ 69,000 manufacturing overhead applied to work in process $ 79,000 the company's cost of goods sold was $243,000 prior to closing out its manufacturing overhead account. the company closes out its manufacturing overhead account to cost of goods sold. which of the following statements is true? multiple choice manufacturing overhead was overapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $253,000 manufacturing overhead was underapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $233,000 manufacturing overhead was underapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $253,000 manufacturing overhead was overapplied by $10,000; cost of goods sold after closing out the manufacturing overhead account is $233,000

Answers: 1

Answer

Business, 22.06.2019 17:40

Within the relevant range, if there is a change in the level of the cost driver, then a. total fixed costs will remain the same and total variable costs will change b. total fixed costs will change and total variable costs will remain the same c. total fixed costs and total variable costs will change d. total fixed costs and total variable costs will remain the same

Answers: 3

Answer

Business, 22.06.2019 20:50

Happy foods and general grains both produce similar puffed rice breakfast cereals. for both companies, thecost of producing a box of cereal is 45 cents, and it is not possible for either company to lower their productioncosts any further. how can one company achieve a competitive advantage over the other?

Answers: 1

Answer

You know the right answer?

Imagine that the U. S. Congress, recognizing the importance of being well dressed, started giveing p...

Questions