Refer to the Information Provided in Figure 17

question 6

Multiple Choice

Refer to the information provided in Figure 17.1 below to answer the question(s) that follow. Figure 17.1
-Refer to Figure 17.1. Dmitri has two job offers when he graduates from college. Dmitri views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $40,000. The second offer is at a fixed salary of $20,000 plus a possible bonus of $40,000. Dmitri believes that he has a 50-50 chance of earning the bonus. Dmitri's expected utility from the first job offer is ________ and it is ________ from the second job offer.

• A) 180; 210
• B) 180; 110
• C) 180; 160
• D) 90; 160

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Definitions:

Net Pay

The amount of an employee's earnings that remains after deductions, such as taxes and retirement contributions, have been applied.

FICA Social Security Tax

A United States federal tax required to be withheld from an employee's paycheck to fund the Social Security program, which provides benefits for retirees, the disabled, and children of deceased workers.

FICA Medicare Tax

A federal payroll tax that is part of FICA, specifically designated to fund the Medicare program, which provides health insurance to elderly and disabled Americans.

Unemployment Tax Rates

Unemployment tax rates are percentages that employers must pay to state and federal agencies, based on the number of their employees, to fund unemployment insurance benefits.