Let T(1) denote the income tax, in dollars, that you pay on a yearly income of I dollars. The rate of change is known as the marginal tax rate. (a) Explain the meaning of the marginal tax rate in practical terms. O The expression is the additional tax you pay, in dollars, on each additional dollar earned. dT O The expression is the change in the total tax you pay, in dollars, from one year to the next. di O The expression dT is the total tax you pay, in dollars, of your yearly income. dT O The expression is the additional income you earn, in dollars, when the tax rate decreases. di dT O The expression is the total income you earn, in dollars, after paying taxes. (b) The marginal tax rate is normally given as a percentage. Explain in practical terms what a marginal tax rate of 20% means. For each additional dollar earned, you pay an additional tax of 20% of $1.00, or $ (c) You are offered a payment of $1000 for a speaking engagement. You will have to pay $350 for travel and lodging, and your marginal tax rate is 20%. How much, after paying travel, lodging, and taxes, do you earn from the speaking engagement? (Assume that yo pay tax only on the net income, that is, the payment minus the expenses of travel and lodging.)

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Estimation

A new framework of data analysis where the new statistical methods are used for interpreting the results and analyzing the data is known as estimation in statistics.