Economics_Introduction to economics_03_MC_03_279_SPI

docx

School

Calicut University Institute of Engineering and Technology *

*We aren’t endorsed by this school

Course

Subject

Economics

Date

Nov 24, 2024

Type

docx

Pages

Uploaded by rahul007achoos

Economics_ Introduction to economics_03_MC_03_279_SPI Question: Suppose the income earned by an individual in a year is $20000. 10% federal income tax paid by an individual when income $5000, 13% federal income tax paid when income is $10000, 15% federal income tax paid when income is $15000, and 18% federal income tax paid when income is$20000. How much is the marginal tax rate? a. 37%. b. 15%. c. 12%. d. 10% Solution: Answer is option ‘a’. General guidance: Concepts and reason The concept of the question is based on tax. Tax is the compulsory payment to the government. The government would impose a tax based on income received from work, business profit, and wealth of individuals. Fundamentals The marginal tax rate is calculated by using the formula is represented as follows: Marginal tax rate Sum of the income tax rate at different income slab  Starting hint: Understand the concept of marginal tax rate. Step 1: The marginal tax rate is the tax rate paid on the additional dollar of income earned by the individual. Explanation: The marginal tax is the change in tax payable per change in taxable income in a given period of time. Common mistake: The chances of making errors while explaining like marginal tax rate is not the additional tax rate paid on the additional income earned by the individual. Hint for the next step: Calculate the marginal tax rate. Step 2: The average tax rate is calculated by using the formula as follows: Tax paid Average tax rate 100 Taxable income 100 a b      Explanation: The marginal tax rate is calculated by adding the tax rate at different income slab, which is shown in step 2 respectively. The marginal tax rate is 56%. Common mistake: The chances of making mistake while subtracting the variables instead of adding them.

Discover more documents: Sign up today!

Unlock a world of knowledge! Explore tailored content for a richer learning experience. Here's what you'll get:

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

Related Documents

econ001-Examstyle-Q5.PNG

Screenshot 2023-09-06 145006.png

ECS2602.docx.doc_NOTES.docx

IMG_9533.jpeg

Key Questions for Making Major Decisions: Considerations for

image (1).jpg

Screenshot 2023-12-17 at 12.26.45 AM.png

Week 5_Case Study_Unemployment and Inflation.edited.docx

Recommended textbooks for you

Economics Today and Tomorrow, Student Edition

Economics

ISBN:9780078747663

Author:McGraw-Hill

Publisher:Glencoe/McGraw-Hill School Pub Co

Economics:

Economics

ISBN:9781285859460

Author:BOYES, William

Publisher:Cengage Learning

Survey Of Economics

Economics

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Cengage,

MACROECONOMICS FOR TODAY

Economics

ISBN:9781337613057

Author:Tucker

Publisher:CENGAGE L

Economics For Today

Economics

ISBN:9781337613040

Author:Tucker

Publisher:Cengage Learning

Microeconomics: Private and Public Choice (MindTa...

Economics

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:Cengage Learning

SEE MORE TEXTBOOKS

Recommended textbooks for you

Economics Today and Tomorrow, Student Edition
Economics
ISBN:9780078747663
Author:McGraw-Hill
Publisher:Glencoe/McGraw-Hill School Pub Co
Economics:
Economics
ISBN:9781285859460
Author:BOYES, William
Publisher:Cengage Learning
Survey Of Economics
Economics
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Cengage,
MACROECONOMICS FOR TODAY
Economics
ISBN:9781337613057
Author:Tucker
Publisher:CENGAGE L
Economics For Today
Economics
ISBN:9781337613040
Author:Tucker
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning