Consider the economy of Caronia, where citizens consume only oranges. Assume tha

Question

Consider the economy of Caronia, where citizens consume only oranges. Assume that oranges are priced at $1 each, and each person can buy, at most, 5,000 oranges. The government has devised the following tax plans: Consumption up to 1,000 oranges is taxed at 10%. Consumption higher than 1,000 oranges is taxed at 40%. Consumption up to 2,000 oranges is taxed at 25%. Consumption higher than 2,000 oranges is taxed at 15%. 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. Under Plan B, the average tax rate a tax system. as more oranges are consumed. Therefore, Plan B is

Explanation / Answer

column 1: 10, 40, 40 column 2: 10, (500*40+1000*10)/1500=20, (1500*40+1000*10)/2500=28 column 3: 25, 25, 15 column 4: 25, 25, (2000*25+500*15)/2500 = 23 eventually decreases not sure for last without knowing choices

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---