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 rating such that once its layoffs fall below a certain level, it pays the same minimum unemployment insurance tax rate.
D) with imperfect experience rating such that above a certain level, the unemployment tax rate increases more than in proportion to layoffs.

Question

Quizplus · Accepted Answer

Since Ajax Incorporated is an unstable employer that frequently lays off workers, it would prefer to locate its plants in states with imperfect experience rating. Option B, where once layoffs increase beyond a certain level, the company does not have to pay a higher unemployment insurance tax rate, would be the best choice for Ajax Incorporated. This would allow the company to lay off workers without having to pay higher unemployment insurance tax rates.

If Ajax Incorporated Is a Very Unstable Employer That Frequently