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: 3. Understanding marginal and average tax ratesConsider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised thefollowing tax plans:Plan APlan B• Consumption up to 1,000 apples is taxed at 5%.• Consumption up to 2,000 apples is taxed at 45%.• Consumption higher than 1,000 apples is taxed at 40%.• Consumption higher than 2,000 apples 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 600 apples, 1,400 apples, and 2,500 apples, respectively.Consumption LevelPlan APlan B(Quantity of apples) Marginal Tax RateAverage Tax RateMarginal Tax RateAverage Tax Rate(Percent)(Percent)(Percent)(Percent)6001,4002,500Complete 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

Plan A In the case of 600 quantities, the marginal tax rate is 5% since the consumption is below…

Answered: Consider the economy of Pomistan, where…

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 plan

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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