Homework Answers
12) The correct answer is C.
In the progressive tax system, as the income increases the tax on the additional income also increase. Eventually, the marginal tax exceeds the average income tax.
13) The correct answer is B.
The decrease in marginal tax rates will promote constraint on tax evasion since public will have to pay lesser tax to the authorities.
14) The correct answer is A.
In proportional tax structure the same amount of tax is levied across all the income groups, hence if the marginal tax rate is 20% then the average tax rate has to be 20% as well.
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Quiz 12. The marginal tax rate will eventually exceed the average tax rate for a: a....
5. Understanding marginal and average tax rates Consider the economy of Pomistan, where citizens consume only...
5. Understanding marginal and average tax rates Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 apples is taxed at 50%. • Consumption higher than 1,000 apples is taxed at 20% Plan B • Consumption up to 2,000 apples is taxed at 10%. . Consumption higher than 2,000 apples is taxed at 25%. Use the Plan...
13 a. The following tax proposal has income as the tax base. Calculate the marginal tax...
13 a. The following
tax proposal has income as the tax base. Calculate the marginal tax
rate for an income of $5,000 and an income of $40,000. Then,
calculate the percentage of income paid in taxes for an individual
with a pre‐tax income of $5,000 and for an individual with a pre
tax income of $40,000. Classify the tax as being proportional,
progressive, or regressive. Round answers to two places after the
decimal, where applicable.
Tax Proposal: All income is...
< Back to Assignment Attempts: Keep the Highest: 12 11. Understanding marginal and average tax rates...
< Back to Assignment Attempts: Keep the Highest: 12 11. Understanding marginal and average tax rates Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 apples is taxed at 5%. • Consumption higher than 1,000 apples is taxed at 40%. Plan B • Consumption up to 2,000 apples is taxed at 40%. • Consumption higher than...
8. Understanding marginal and average tax rates Consider the economy of Citronia, where citizens consume only...
8. Understanding marginal and average tax rates Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 oranges is taxed at 50%. • Consumption higher than 1,000 oranges is taxed at 20%. Plan B • Consumption up to 2,000 oranges is taxed at 10%. Consumption higher than 2,000 oranges is taxed at 25%. Use the Plan A...
5. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only...
5. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 coconuts is taxed at 50%. • Consumption higher than 1,000 coconuts is taxed at 20%. Plan B • Consumption up to 2,000 coconuts is taxed at 15%. • Consumption higher than 2,000 coconuts is taxed at 60%. Use the Plan...
5. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only...
5. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption higher than 1,000 coconuts is taxed at 40%. Plan B • Consumption up to 2,000 coconuts is taxed at 30%. Consumption higher than 2,000 coconuts is taxed at 10%. Use the Plan A...
QUESTION 22 Products that create external benefits are over-consumed because the private benefits exceed the private...
QUESTION 22 Products that create external benefits are over-consumed because the private benefits exceed the private costs under-consumed because consumers only consider the private benefits of consumption O optimally consumed as long as private benefits equal private costs O underconsumed because the social costs exceed the social benefits QUESTION 23 The Coase theorem suggests that private bargains will ensure the efficiency of markets even when externalities exist but only in the presence of government regulation if consumers have more information...
1.1 Which of the following is incorrect (not true) about marginal and average tax rates? In...
1.1 Which of the following is incorrect (not true) about marginal and average tax rates? In a proportional income tax system, the marginal tax rate is higher than the average tax rate. In a regressive income tax system, the marginal tax rate is lower than the average tax rate. None of the listed answers is incorrect. In a progressive income tax system, the marginal tax rate is higher than the average tax rate. 1.2 Which of the following represents an...
Back to Assignment Attempts: 24 Keep the Highest: 2.473 3. Understanding marginal and average tax rates...
Back to Assignment Attempts: 24 Keep the Highest: 2.473 3. Understanding marginal and average tax rates Using the information provided on the income tax systems in two hypothetical countries, Country A and Country B, complete the following tables. Country A Taxable Income Tax Liability (Dollars) (Dollars) 20,000 1,000.00 40,000 8,000.00 60,000 24,000.00 Country B Taxable Income Tax Liability (Dollars) (Dollars) 20,000 $6,000 40,000 $10,000 60,000 $12,000 Complete the following table by deriving the marginal tax rates in the income ranges...
1. The percentage of an additional dollar that is paid in tax is called A. a...
1. The percentage of an additional dollar that is paid in tax is called A. a regressive tax. B. the average tax rate. C. a proportional tax. D. the marginal tax rate. E. a progressive tax. 2. If the average tax rate remains constant as income? changes, the tax is A. progressive. B. regressive. C. definitely fair. D. proportional. E. impossible to determine with the information given. 3. When each taxpayer pays the same average tax rate regardless of the?...
5. Understanding marginal and average tax rates Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 apples is taxed at 50%. • Consumption higher than 1,000 apples is taxed at 20% Plan B • Consumption up to 2,000 apples is taxed at 10%. . Consumption higher than 2,000 apples is taxed at 25%. Use the Plan...
13 a. The following
tax proposal has income as the tax base. Calculate the marginal tax
rate for an income of $5,000 and an income of $40,000. Then,
calculate the percentage of income paid in taxes for an individual
with a pre‐tax income of $5,000 and for an individual with a pre
tax income of $40,000. Classify the tax as being proportional,
progressive, or regressive. Round answers to two places after the
decimal, where applicable.
Tax Proposal: All income is...
< Back to Assignment Attempts: Keep the Highest: 12 11. Understanding marginal and average tax rates Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 apples is taxed at 5%. • Consumption higher than 1,000 apples is taxed at 40%. Plan B • Consumption up to 2,000 apples is taxed at 40%. • Consumption higher than...
8. Understanding marginal and average tax rates Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 oranges is taxed at 50%. • Consumption higher than 1,000 oranges is taxed at 20%. Plan B • Consumption up to 2,000 oranges is taxed at 10%. Consumption higher than 2,000 oranges is taxed at 25%. Use the Plan A...
5. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the following tax plans: Plan A • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption higher than 1,000 coconuts is taxed at 40%. Plan B • Consumption up to 2,000 coconuts is taxed at 30%. Consumption higher than 2,000 coconuts is taxed at 10%. Use the Plan A...
QUESTION 22 Products that create external benefits are over-consumed because the private benefits exceed the private costs under-consumed because consumers only consider the private benefits of consumption O optimally consumed as long as private benefits equal private costs O underconsumed because the social costs exceed the social benefits QUESTION 23 The Coase theorem suggests that private bargains will ensure the efficiency of markets even when externalities exist but only in the presence of government regulation if consumers have more information...
Back to Assignment Attempts: 24 Keep the Highest: 2.473 3. Understanding marginal and average tax rates Using the information provided on the income tax systems in two hypothetical countries, Country A and Country B, complete the following tables. Country A Taxable Income Tax Liability (Dollars) (Dollars) 20,000 1,000.00 40,000 8,000.00 60,000 24,000.00 Country B Taxable Income Tax Liability (Dollars) (Dollars) 20,000 $6,000 40,000 $10,000 60,000 $12,000 Complete the following table by deriving the marginal tax rates in the income ranges...
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