At a taxable income of $80,000 Adam's income tax is $18,400. When his taxable income rises to $90,000 his income tax is $21,000. Based on this information, Adam's marginal tax rate is _____________ percent and his new average tax rate is ____________ percent
A) 3.8; 23.0
B) 23; 26.0
C) 26; 23.3
D) 18; 24.0
E) 21; 23.3
C
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If, by law, we suppress free market prices to determine who gets what,
A) other criteria will come into play to ration scarce goods. B) scarcity will be reduced or eliminated. C) shortages will be reduced or eliminated. D) there will be no alternative way to make the quantity demanded conform to the quantity supplied.
Other things being equal, corrective taxation is superior to regulation in the long run because it _____
a. gives the producer an incentive to find a way to reduce external costs b. the tax revenue can be used as compensation c. the tax revenue can be used on other parts of the budget d. is more burdensome on the producers of the externality
Large income differences will be eradicated if the market mechanism is working well
a. True b. False Indicate whether the statement is true or false
Which of the following is likely to increase the elasticity of demand for a good?
A. A decrease in the price. B. A decrease in the availability of close substitutes. C. A longer period of time. D. A smaller share of income designated for the good in question.