Would a Firm Whose Health Insurance Premiums Are Based on an Experience

question 51

Essay

Would a firm whose health insurance premiums are based on an experience rating be more likely to develop health and safety educational programs for its employees? Explain why or why not.

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Definitions:

Capacity

The maximum output or producing ability of a plant, machine, or company under normal or specific conditions.

Operating Profit

The earnings before interest and taxes (EBIT) generated from a company's core business operations.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production volume.

Contribution Margin Ratio

The ratio of contribution margin (sales minus variable costs) to sales revenue, indicating the percentage of each sales dollar available to cover fixed costs and profit.