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: 3. Understanding marginal and average tax ratesConsider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devisedthe following tax plans:Plan APlan B• Consumption up to 1,000 coconuts is taxed at 5%.• Consumption up to 2,000 coconuts is taxed at 30%.• Consumption higher than 1,000 coconuts is taxed at 40%.• Consumption higher than 2,000 coconuts is taxed at 10%.Use the Plan A and Plan B tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at theconsumption level of 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively.Consumption LevelPlan APlan B(Quantity of coconuts)Marginal Tax Rate Average Tax RateMarginal Tax Rate Average Tax Rate(Percent)(Percent)(Percent)(Percent)5001,4002,500Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system.ProgressiveProportionalRegressivePlan APlan B

Tax can be defined as the contributions made by the public to the government revenue. It is the main…

3. 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 folloving tax plans: Plan A Plan B • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption higher than 1,000 coconuts is taxed at 40%. • Consumption higher than 2.000 coconuts is taxed at 10%. • Consumption up to 2,000 coconuts is taxed at 30%. Use the Plan A and Plan 8 tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption level of 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively. Consumption Level Plan A Plan B (Quantity of coconuts) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 1,400 2,500 Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system. Progressive Proportional Regressive Plan A Plan B

3. 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 folloving tax plans: Plan A Plan B • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption higher than 1,000 coconuts is taxed at 40%. • Consumption higher than 2.000 coconuts is taxed at 10%. • Consumption up to 2,000 coconuts is taxed at 30%. Use the Plan A and Plan 8 tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption level of 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively. Consumption Level Plan A Plan B (Quantity of coconuts) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 1,400 2,500 Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system. Progressive Proportional Regressive Plan A Plan B

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Design Of The Tax System

Section: Chapter Questions

Problem 4PA

See similar textbooks

Similar questions

Suppose that gifts were taxed at a rate of 10 for amounts up to 100,000 and 20 for anything over that amount. Would this tax be regressive or progressive?
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 Plan B • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption up to 2,000 coconuts is taxed at 45%. • Consumption higher than 1,000 coconuts is taxed at 50%. Consumption higher than 2,000 coconuts is taxed at 15%. Use the Plan A and Plan B tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption levels of 500 coconuts, 1,800 coconuts, and 3,000 coconuts, respectively. Consumption Level Plan A Plan B (Quantity of coconuts) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 45 1,800 50 45 3,000 50 15 Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a…
5. 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 Plan B • Consumption up to 1,000 oranges is taxed at 5%. • Consumption up to 2,000 oranges is taxed at 40%. • Consumption higher than 1,000 oranges is taxed at 40%. • Consumption higher than 2,000 oranges is taxed at 10%. Use the Plan A and Plan B tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption levels of 600 oranges, 1,400 oranges, and 2,500 oranges, respectively. Consumption Level Plan A Plan B (Quantity of oranges) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 600 1,400 2,500 Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system.…
8. Understanding marginal and average tax rates Consider the economy of Pomistan, where citizens consume only apples. Assume that apples cost $1 each, and each person can buy at most 5,000 apples. The government has devised the following tax plans: Plan A Plan B Consumption up to 1,000 apples is taxed at 10%. Consumption up to 2,000 apples is taxed at 20%. Consumption higher than 1,000 apples is taxed at 40%. Consumption higher than 2,000 apples is taxed at 10%. Derive the marginal and average tax rates under each tax plan at the consumption levels of 500 apples, 1,500 apples, and 2,500 apples, respectively. Fill in the following table with your results. Plan A Plan B Consumption Level Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate 500 apples 10% 10% 20% 20% 1,500 apples 40% 20% 2,500 apples 40% 10%
Tax Revenue ($) 50 NE 40 30 20 10 0 20 40 60 According to this Laffer curve, should the government increase the tax rate from 4C 80 Tax Rate (%) 100 O a.) Yes, because the tax revenue continues to increase after a tax rate of 4C b.) No, because the government should increase the tax rate to 100%. c) No, because the tax revenue is no longer maximized. NVIDIA G SYNE d.) Yes, because the government will receive a higher tax revenue. O
9.which flows represent taxes? a. C and D b. E and F c. A and B d. D and E
The top 1% of income earners in the U.S. (those with the highest taxable incomes) pay O about the same percentage of their incomes in taxes as the average U.S. taxpayer. a much lower percentage of their incomes in taxes than the average U.S. taxpayer. O a much higher percentage of their incomes in taxes than the average U.S. taxpayer. O about 15 percent of their incomes in income taxes O a and d
5. Calculating tax incidence Suppose that the U.S. government decides to charge beer producers a tax. Before the tax, 25 billion cases of beer were sold every year at a price of $7 per case. After the tax, 19 billion cases of beer are sold every year; consumers pay $8 per case, and producers receive $4 per case (after paying the tax) The amount of the tax on a case of beer is per case. Of this amount, the burden that falls on consumers is per case, and the burden that falls on producers is per case True or False: The effect of the tax on the quantity sold would have been smaller if the tax had been levied on consumers True False
5. Calculating tax incidence Suppose that the US. government decides to charge beer consumers a tax. Before the tax, 10,000 cases of beer were sold every week at a price of $4 per case. After the tax, 3,000 cases of beer are sold every week; consumers pay $5 per case (including the tax), and producers recelve $2 per Case The amount of the tax on a case of beer is s per case. of this amount, the burden that falls on consumers is s per case, and the burden that falls on producers is per case. True or False: The effect of the tax on the quantity sold would have been larger if the tax had been levied on producers les or O True O False
Figure #2 price 10 D after as 10 20 40 50 70 Refer to Figure#2. Respectively, what are the tax burdens paid by consumers and sellers? O $1.00 per unit and $2.00 per unit O $3.00 per unit and $1.00 per unit O $1.00 per unit and $3.00 per unit- $3.00 per unit and $2.00 per unit O Tyne here to search
5. Understanding marginal and average tax rates Consider the Imaginary nation of Legumina, whose citizens only consume carrots. Assume that the price of carrots is $1 each. The government of Legumina has developed two different tax schemes, the details of which are outlined below: Plan X . Consumption up to 1,000 carrots is taxed at 5%. . Consumption higher than 1,000 carrots is taxed at 40%. Use the Plan X and Plan Y tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption levels of 500 carrots, 1,400 carrots, and 2,500 carrots, respectively. Consumption Level (Quantity of carrots) Plan X 500 1,400 2,500 Plan Y Plan X Plan Y Consumption up to 2,000 carrots is taxed at 30%. . Consumption higher than 2,000 carrots is taxed at 10%. Marginal Tax Rate (Percent) Average Tax Rate (Percent) Plan Y Marginal Tax Rate (Percent) Complete the following table by indicating whether each plan is a progressive tax system, a…
5. Calculating tax incidence Suppose that the U.S. government decides to charge cola consumers a tax. Before the tax, 50 billion cases of cola were sold every year at a price of $6 per case. After the tax, 45 billion cases of cola are sold every year; consumers pay $8 per case (including the tax), and producers receive $5 per case. The amount of the tax on a case of cola is $ the burden that falls on producers is $ True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. True per case. Of this amount, the burden that falls on consumers is $ per case. False per case, and