Would the employee be better or if

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Consider an employee who does not receive any employer-based health insurance and who has to divide their weekly, after tax, income of £700 between health insurance and all other goods. Draw the opportunity set for this worker if both health insurance and other goods cost £100 per week. On the same graph, show how the employee's opportunity set would change if the employer agreed to give the employee £100 worth of health insurance which would be tax free. Would the employee be better or if, instead of the health insurance, she was given a £100 per week pay increase which would be taxed at 20%?

Reference no: EM1362755

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