Question

b. Now suppose instead that housing credits are withdrawn gradually at a rate of $500 for each $1,000 that someone is earning above the wage limit of $26,500 per year. Assuming Layla earns an extra $7,500 per year above her original wage of $35,000 per year, how large will her housing credit be

Answer 1

Answer: $0

Explanation:

Layla qualifies for $8,000 in housing credits.

These are withdrawn at $500 for every $1,000 she earns above the wage limit of $26,500

Layla's annual income = 35,000 + 7,500

= $42,500

Amount earned above limit = 42,500 - 26,500

= $16,000

Amount of housing credit withdrawn is $500 per thousand so for $16,000, $8,000 will be withdrawn from her housing credit.

Housing credit = 8,000 - 8,000

= $0