Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 8, Problem 7IAPA
To determine
To calculate:
The average tax rate and marginal tax rate that is paid by the Mr. L and Ms. S and whether the levied income tax is fair.
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Suppose you earn $40,000 per year and pay taxes based on marginal tax rates. The first tax bracket, which taxes at 5 percent, ranges
from $0 to $20,000. The second tax bracket, which taxes at 25 percent, ranges from $20,001 to $80,000. How much will you pay in
total taxes?
Instructions: Enter your answer as a whole number.
2$
In the market for therbligs, the supply curve is Ps=$10+$0.05Qs and the market demand curve is Pd=$20-$0.10Qd
If an excise tax is imposed on therbligs, what fraction of that tax will be borne by therblig sellers?
Suppose in Fiscalville there is a 5 percent tax on the first $10,000 of income, but there is a 15 percent tax on earnings between
$10,000 and $20,000 and a 25 percent tax on income between $20,000 and $30,000. Any income above $30,000 is taxed at 35
percent.
Instructions: Round your answers to the nearest whole number.
a. If your income is $70,000, how much will you pay in taxes?
b. Determine your marginal tax rate.
percent
c. Determine your average tax rate.
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Chapter 8 Solutions
Foundations of Economics (8th Edition)
Ch. 8 - Prob. 1SPPACh. 8 - Prob. 2SPPACh. 8 - Prob. 3SPPACh. 8 - Prob. 4SPPACh. 8 - Prob. 5SPPACh. 8 - Prob. 6SPPACh. 8 - Prob. 7SPPACh. 8 - Prob. 8SPPACh. 8 - Prob. 9SPPACh. 8 - Prob. 10SPPA
Ch. 8 - Prob. 1IAPACh. 8 - Prob. 2IAPACh. 8 - Prob. 3IAPACh. 8 - Prob. 4IAPACh. 8 - Prob. 5IAPACh. 8 - Prob. 6IAPACh. 8 - Prob. 7IAPACh. 8 - Prob. 8IAPACh. 8 - Prob. 9IAPACh. 8 - Prob. 10IAPACh. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - Prob. 4MCQCh. 8 - Prob. 5MCQCh. 8 - Prob. 6MCQCh. 8 - Prob. 7MCQCh. 8 - Prob. 8MCQ
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- Suppose you earned $60,000 per year and pay taxes based on marginal tax rates. The first tax bracket which taxes at 10% ranges from zero dollars to $30,000. The second tax bracket which tax at 25% ranges from 30,001 to $120,000. How much will you pay in total taxes?arrow_forwardImagine Two Households each with an income of $65,000 per year. Household A consists of two married individuals both 51 years old with one child who is now 27 years old and out of the house. Household B consists of two married individuals who are 31 years old and have three young children, two of which attend day care. The Government in implementing policies to effect Tax Fairness will concentrate on: The Benefits Principle The Marginal Tax Rate of each Household Each Household's individual Laffer Curve Which Household has the greater economic capacityarrow_forwardSuppose in Fiscalville there is a 0 percent tax on the first $10,000 of income, but there is a 20 percent tax on earnings between $10,000 and $20,000 and a 30 percent tax on income between $20,000 and $30,000. Any income above $30,000 is taxed at 40 percent. Instructions: Round your answers to the nearest whole number. a. If your income is $60,000, how much will you pay in taxes? $ 13,000 8 b. Determine your marginal tax rate. 40 percent c. Determine your average tax rate. 21.6 * percent d. Is Fiscalville's income tax progressive? Yesarrow_forward
- The govemment is considering imposing taxes onthe sellers of certain classes of products. The first tax they are considering is a tax on 2% milk. The second is a tax on all dairy products. The third is a tax on all food products. Which of these three taxes would you expect to have the largest impact on the sticker prices of the taxed products? Explain.arrow_forwardDiscuss how a government might use taxation to affect the distribution of incomearrow_forwardDiscuss the key tenets of the U.S. personal income tax code. For example, our tax rates are progressive, which means that the more one earns the higher her tax rate. Do you think that this is fair?arrow_forward
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