Study question 10 Aplia tudent Questionx eting Pea.. Cengage&ain; Euggested sen.

ID: 1105856 • Letter: S

Question

Study question 10 Aplia tudent Questionx eting Pea.. Cengage&ain; Euggested sen. My Home 0WebSice Gallery tax rates in the following table. Enter your answers as whole numbers, Le. enter a.15 as 15. What observation can you make concerning the relationship between marginal and average tax rates? Income Tax Paid Average Tax Rate Marginal Tax Rate 100 200 300 400 100 [ %] [ %] 500 10 30 60 150 The tax rates shown in this table are True or False: As the marginal tax rate increases, the average tax rate declines O True False

Explanation / Answer

PART-1)

Income

Tax Paid

Average rate tax (%)

Marginal rate tax (%)

Working

100

10/100*100 =10

200

30/200*100 =15

300

60/300*100 =20

400

100

100/400*100 =25

500

150

150/500*100 =30

PART-2) The tax rate is progressive

Explanation: The average is increasing with an increase in income

PART-3) As the marginal tax rate increases, the average tax rate declines: FALSE

Explanation: The marginal tax rate refers to the percentage of an increment of income that is paid in taxes. As the marginal tax rate increases, the average tax rate also increases