Suppose that the government taxes income in the following fashion: 20 percent of the first $50,000 . 40 percent of the next $50,000 . and 60 percent of all income over $100,000 . Marshall earns $200,000 . and Lily earns $600,000 . Which of the following statements is correct?
a. Marshall's marginal tax rate is higher than Lily's marginal tax rate.
b. Marshall's average tax rate is higher than his marginal tax rate.
c. Lily's average tax rate is higher than her marginal tax rate.
d. Lily's average tax rate is higher than Marshall's average tax rate.
d
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Which of the following makes the Consumer Price Index a less accurate measure of the cost of living?
i. The monthly price survey conducted to collect information about prices is very unreliable. ii. The existence of a new goods bias in the calculation of the CPI iii. The existence of a quality change bias in the calculation of the CPI A) i, ii, and iii B) i and ii C) i only D) ii only E) ii and iii
Long-run equilibrium under monopolistic competition and perfect competition is similar in that
A) price equals marginal revenue. B) price equals marginal cost. C) firms produce at the minimum point of their average cost curves. D) firms break even.