If Ajax Incorporated Is a Very Unstable Employer That Frequently

question 29

Multiple Choice

If Ajax Incorporated is a very unstable employer that frequently lays off workers, it will prefer to locate its plants in states

• A) with perfect experience rating of unemployment insurance tax rates.
• B) with imperfect experience rating such that once its layoffs increase beyond a certain level, it does not have to pay a higher unemployment insurance tax rate.
• C) with imperfect experience ratings such that once its layoffs fall below a certain level, it pays the same minimum unemployment insurance tax rate.
• D) with imperfect experience ratings such that above a certain level, the unemployment tax rate increases more than in proportion to layoffs.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales, such as materials and labor.

Net Income

The amount of money left over after all expenses and taxes have been subtracted from total revenue.

Units

Units refer to the individual components or quantities of a product, investment, or other items that are counted or measured.

Month

A unit of time, roughly based on the period of the Moon's orbit around Earth, traditionally used to measure durations of approximately 30 days.