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CRapter 1s Why Health Economics?2 Mechanics usually have better information about how to fixautomobiles than their customers do. What problems does thisadvantage create? Do mechanics or their customers do anything tolimit these problems?3 A mandatory health insurance plan costs $4,000. One worker earns$24,500 in employment income and $500 in investment incomeAnother worker earns $48,000 in employment income and $2,00oin investment income. A third worker earns $68,000 in employmentincome and $7,000 in investment income. A premium-based systemwould cost each worker $4,000. A wage tax-based system wouldcost each worker 8.5 percent of wages. An income tax-based systemwould cost each worker 8 percent of income. For each worker,calculate the cost of the insurance as a share of total income6)Worker 1Worker 2 Worker 3$24,500 $48,000$68,000$500 $2,00o $7,000$4,000 $4,000 $4,000= Employment incomeefInvestment income- Premium cost of insurancePremium as a percentage of income P/(E +IDW = Wage tax cost of insurance-0.085 × EWage tax cost as a percentage of income W/CE+D7-income tax cost of insurance-0.080 × (E + 1)Income tax cost as a percentage of incomeTE

Question

A mandatory health insurance plan costs $4,000. One worker earns $24,000 in employment income and $500 in investment income. Another worker earns $48,000 in employment income and $2,000 in investment income. A third worker earns $68,000 in employment income and $7,000 in investment income. A premium-based system would cost each worker $4,000. A wage tax-based system would cost each worker 8.5 percent of wages. An income tax-based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income.

CRapter 1s Why Health Economics?
2 Mechanics usually have better information about how to fix
automobiles than their customers do. What problems does this
advantage create? Do mechanics or their customers do anything to
limit these problems?
3 A mandatory health insurance plan costs $4,000. One worker earns
$24,500 in employment income and $500 in investment income
Another worker earns $48,000 in employment income and $2,00o
in investment income. A third worker earns $68,000 in employment
income and $7,000 in investment income. A premium-based system
would cost each worker $4,000. A wage tax-based system would
cost each worker 8.5 percent of wages. An income tax-based system
would cost each worker 8 percent of income. For each worker,
calculate the cost of the insurance as a share of total income
6)
Worker 1Worker 2 Worker 3
$24,500 $48,000$68,000
$500 $2,00o $7,000
$4,000 $4,000 $4,000
= Employment income
ef
Investment income
- Premium cost of insurance
Premium as a percentage of income P/(E +ID
W = Wage tax cost of insurance-0.085 × E
Wage tax cost as a percentage of income W/CE+D
7-income tax cost of insurance-0.080 × (E + 1)
Income tax cost as a percentage of incomeTE
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CRapter 1s Why Health Economics? 2 Mechanics usually have better information about how to fix automobiles than their customers do. What problems does this advantage create? Do mechanics or their customers do anything to limit these problems? 3 A mandatory health insurance plan costs $4,000. One worker earns $24,500 in employment income and $500 in investment income Another worker earns $48,000 in employment income and $2,00o in investment income. A third worker earns $68,000 in employment income and $7,000 in investment income. A premium-based system would cost each worker $4,000. A wage tax-based system would cost each worker 8.5 percent of wages. An income tax-based system would cost each worker 8 percent of income. For each worker, calculate the cost of the insurance as a share of total income 6) Worker 1Worker 2 Worker 3 $24,500 $48,000$68,000 $500 $2,00o $7,000 $4,000 $4,000 $4,000 = Employment income ef Investment income - Premium cost of insurance Premium as a percentage of income P/(E +ID W = Wage tax cost of insurance-0.085 × E Wage tax cost as a percentage of income W/CE+D 7-income tax cost of insurance-0.080 × (E + 1) Income tax cost as a percentage of incomeTE

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check_circleAnswer
Step 1

From the data in the question (in picture), we see that the percentage share and share can be calculated easity. 

Step 2

Premium % of income= P/(E+I)    

Worker 1
4,000/(24,500+500)=.16


Worker 2

4,000/(48,000+2,000) = .08

Worker 3
4,000/(68,000+7,000) =.05

 

Step 3


W= Wage tax cost = 0.085xE      

Worker 1
0.085x 24,500= 2082.5         

Worker 2
0.085 x 48,000= 4080        &nbs...

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