Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the following tax plans: 3. Understanding marginal and average tax ratesConsider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devisedthe following tax plans:Plan APlan B• Consumption up to 1,000 coconuts is taxed at 5%.• Consumption up to 2,000 coconuts is taxed at 30%.• Consumption higher than 1,000 coconuts is taxed at 40%.• Consumption higher than 2,000 coconuts 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 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively.Consumption LevelPlan APlan B(Quantity of coconuts)Marginal Tax Rate Average Tax RateMarginal Tax Rate Average Tax Rate(Percent)(Percent)(Percent)(Percent)5001,4002,500Complete 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

Tax can be defined as the contributions made by the public to the government revenue. It is the main…

3. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the folloving tax plans: Plan A Plan B • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption higher than 1,000 coconuts is taxed at 40%. • Consumption higher than 2.000 coconuts is taxed at 10%. • Consumption up to 2,000 coconuts is taxed at 30%. Use the Plan A and Plan 8 tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption level of 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively. Consumption Level Plan A Plan B (Quantity of coconuts) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 1,400 2,500 Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system. Progressive Proportional Regressive Plan A Plan B

3. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the folloving tax plans: Plan A Plan B • Consumption up to 1,000 coconuts is taxed at 5%. • Consumption higher than 1,000 coconuts is taxed at 40%. • Consumption higher than 2.000 coconuts is taxed at 10%. • Consumption up to 2,000 coconuts is taxed at 30%. Use the Plan A and Plan 8 tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption level of 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively. Consumption Level Plan A Plan B (Quantity of coconuts) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 1,400 2,500 Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system. Progressive Proportional Regressive Plan A Plan B

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the following tax plans:

3. Understanding marginal and average tax rates
Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised
the following tax plans:
Plan A
Plan B
• Consumption up to 1,000 coconuts is taxed at 5%.
• Consumption up to 2,000 coconuts is taxed at 30%.
• Consumption higher than 1,000 coconuts is taxed at 40%.
• Consumption higher than 2,000 coconuts 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 the
consumption level of 500 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively.
Consumption Level
Plan A
Plan B
(Quantity of coconuts)
Marginal Tax Rate Average Tax Rate
Marginal Tax Rate Average Tax Rate
(Percent)
(Percent)
(Percent)
(Percent)
500
1,400
2,500
Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system.
Progressive
Proportional
Regressive
Plan A
Plan B

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