ECA Essay Example | Topics and Well Written Essays - 2250 words

ECA - Essay Example Second, she is not entitled to tax credits because she has no child. A mother with a child is entitled to tax credit even if she is working part time. 1.3 The total tax credit would increase because the working tax grows as their income dropped. Even if Magdi is working less than 30 hours per week, he is entitled to working tax credit because his father needs care. 1.4 a. Option A will bring more income into the household because the loss of income will be recovered. Furthermore, caring for his father can be done by Sara. The household will still be entitled to a working tax credit thus increasing the source of income which would include the attendance allowance given for the father that is tax free. Also, when Magdi works until the age of 65, he will not incur losses in his pension. b. Option B might bring new source of income for the household because the Magdi would be entitled to Carer’s Allowance. The Carer’s allowance can be paid to both Magdi and Sara. Carer’s allowance is designed to replace earnings that are lost through being a full-time care giver. 2.1 a. Their insurance payout does not match the full amount of their income loss because of state benefits will produce only a well below average income, thus the payout is insufficient to sustain an existing standard of living. Also, the payout is subject to inflation rates. When insurance is a level type the value of the payout income is lesser because it is affected by the inflation rate during such pay out. 2.2 a. Asymmetric information is a situation where one party knows something that another party does not. It is used to refer to information on insurance. Insurers have the information about probabilities of adverse events occurring and base their pricing decisions on those probabilities which they have worked out from their years of claims experience. Individuals, on the other