Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns $28,000 a year and Family B earns $65,000 a year. Both receive a ten percent raise. What is the marginal tax rate of each and what is the extra tax paid by each after the raise?
A) Family A: 10 percent marginal tax rate and $280 in extra taxes; Family B—30 percent marginal tax rate and $1950 in extra taxes.
B) Family A: 10 percent marginal tax rate and $420 in extra taxes; Family B—30 percent marginal tax rate and $2275 in extra taxes.
C) Family A: 20 percent marginal tax rate and $360 in extra taxes; Family B—40 percent marginal tax rate and $2100 in extra taxes.
D) Family A: 20 percent marginal tax rate and $560 in extra taxes. Family B—40 percent marginal tax rate and $2600 in extra taxes.
Answer: C
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If the firm in the above figure produces output level D, it incurs an average fixed cost of production equal to the distance
A) DK. B) RN. C) JL. D) KR.
A short run equilibrium:
a. Will be at a greater output level than the natural level of real output. b. Will be at the natural level of real output c. Will be at a smaller output level than the natural level of real output. d. Short-run equilibrium could be at any of the above levels of output.