1) Suppose the government is considering forcing employers to pay employee's health care costs.Suppose also that workers value health care benefits only 75 cents on the dollar (25% less than cash). Which of the following tax laws would provide employees the highest full compensation wages plus benefits assuming that the labor market has fully adjusted to the new government-mandated health care laws?

No health care tax on employers.

5% health care tax on employers.

10% health care tax on employers.

15% health care tax on employers.

20% health care tax on employers.

2) Rank the below 1-4 in terms of how money is spent the most efficientlyfrom the greatest benefit per dollar spent to the least.

1. You buy your friend a birthday present.
2. Your daughter buys something for her friend using your money.
3. You spend your money on yourself.
4. You buy a white elephant gift for a company party using the credit card of your rich uncle who you don't like and you know never looks at his credit card bills.

3) If a 5% increase in income raises demand by 4%, the income elasticity of demand is: