At each level, the percentage of income that is paid in taxes.

Question

Sam's profit is maximized when he produces shirts. When he does this, the marginal cost of the last shirt he produces is , which is than the price Sam receives for each shirt he sells. The marginal cost of producing an additional shirt (that is, one more shirt than would maximize his profit) is , which is than the price Sam receives for each shirt he sells. Therefore, Sam's profit-maximizing quantity corresponds to the intersection of the curves. Because Sam is a price taker, this last condition can also be written as .

Answer 1

Question

Chapter 3, Problem 9P

A

To determine

At each level, the percentage of income that is paid in taxes.

B

To determine

Whether the tax rate is regressive, progressive or proportional.

C

To determine

The marginal tax rate at different levels of income.

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