The plant union is negotiating with the eagle company, which is on the verge of bankruptcy. eagle has offered to pay for the employees' hospitaliztion insurance in exchange for a wage reduction. the employees each currently pay premiums of $4,000 a year for their insurance. which of the following is correct:

a. if an employee's wages are reduced by $5,000 and the employee is in the 28% marginal tax bracket, the employee would benefit from the offer.
b. if an employee's wages are reduced by $4,000 and the employee is in the 15% marginal tax bracket, the employee would benefit from the offer.
c. if an employee's wages are reduced by $6,000 and the employee is in the 35% marginal tax bracket, the employee would benefit from the offer.
d. a., b., and c.
e. none of these.

d. a., b., and c.

Explanation:

Reduction in pay (a)Marginal tax (b)Reduction in tax (c = a x b)

A. $5000                            0.28                              $1,400

B. $4000                             0.15                                  $600

C. $6000                              0.35                                $2100

Reduction in After-tax Income (d = a - c)

A. $3,600

B. $3,400

C. $3,900

this means that all the above a, b, and c options are correct because in all the three cases, the reduction in after-tax pay of the employee will be less than $4000 value of the nontaxable insurance premium to be paid by the employer which would ultimately benefit the employee.

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

eds? ederal government or feds