3
answers
1
watching
2,774
views
28 Sep 2019
8. Understanding marginal and average tax rates
Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges cost $1 each, and each person can buy at most 5,000 oranges. The government has devised the following tax plans:
Plan A
Plan B
Consumption of up to 1,000 oranges is taxed at 20%.
Consumption of up to 2,000 oranges is taxed at 30%.
Consumption higher than 1,000 oranges is taxed at 80%.
Consumption higher than 2,000 oranges is taxed at 10%.
Derive the marginal and average tax rates under each tax plan at the consumption levels of 500 oranges, 1,500 oranges, and 2,500 oranges, respectively. Fill in the following table with your results.
Plan A
Plan B
Consumption Level
Marginal Tax Rate
Average Tax Rate
Marginal Tax Rate
Average Tax Rate
500 oranges
1,500 oranges
2,500 oranges
8. Understanding marginal and average tax rates
Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges cost $1 each, and each person can buy at most 5,000 oranges. The government has devised the following tax plans:
Plan A | Plan B |
---|---|
Consumption of up to 1,000 oranges is taxed at 20%. | Consumption of up to 2,000 oranges is taxed at 30%. |
Consumption higher than 1,000 oranges is taxed at 80%. | Consumption higher than 2,000 oranges is taxed at 10%. |
Derive the marginal and average tax rates under each tax plan at the consumption levels of 500 oranges, 1,500 oranges, and 2,500 oranges, respectively. Fill in the following table with your results.
Plan A | Plan B | |||
---|---|---|---|---|
Consumption Level | Marginal Tax Rate | Average Tax Rate | Marginal Tax Rate | Average Tax Rate |
500 oranges | ||||
1,500 oranges | ||||
2,500 oranges |
3
answers
1
watching
2,774
views
For unlimited access to Homework Help, a Homework+ subscription is required.
27 Feb 2023
Joshua StredderLv10
28 Sep 2019
Already have an account? Log in