Which of the following could be TRUE given the relationship between a firm's layoffs and its payroll tax for unemployment insurance relative to those of an average firm?

Question

Quizplus · Accepted Answer

Payroll taxes for unemployment insurance are typically based on a firm's layoff history. Therefore, a firm with twice as many layoffs would likely pay more in payroll taxes than the average firm. The 40% increase in payroll taxes in option C seems to be a reasonable approximation based on this relationship. Options A and D are too extreme and do not necessarily hold true. Option B is incorrect because firms with more layoffs are typically charged higher payroll taxes, not less.

Which of the Following Could Be TRUE Given the Relationship