Illustrate wow would the existence of such insurance affect

Assignment Help Business Economics

Reference no: EM1350651

Imagine that the U.S. Congress, recognizing the importance of being well dressed, started giving 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 then 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. Illustrate wow 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?

Reference no: EM1350651

Questions Cloud

Key performance parameter : Explain the difference between a Key Performance Parameter and a Net-Ready Key Performance Parameter and state why they are important to the warfighter

Define the role of the various groups of adopters : Define the role of the various groups of Adopters on the Product Life Cycle and the S-Curve

Sexual response cycle for males and females : Summarize each phase of the sexual response cycle for males, females, and commonalities for both males and females.

Internal control-management : Internal control has gained increasing importance among management, external auditors, regulators, and others. Use a specific example that illustrates the answer.

Illustrate wow would the existence of such insurance affect : Illustrate wow 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.

Improve performance in the workplace : Improving performance in the workplace

Find the maximum vertical height increase of the ball : A reflecting, spherical Christmas tree ornament has a diameter of 20 cm. A child looks at the ornament from a distance of 40 cm. define the image she sees. Where is the image locate.

Justification for internal control system : Write down a report in 700 words, justifying the need for the system when controls are in place with insurance and portfolio approaches.

Show the customer relationships : Customer Relationships - Show the lessons that organizations can learn about customer relationships and customer contact employees

User Account

All Pages