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Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A Plan B • Consumption up to 1,000 apples is taxed at 50%. • Consumption up to 2,000 apples is taxed at 10%. • Consumption higher than 1,000 apples is taxed at 20%. • Consumption higher than 2,000 apples is taxed at 25%. 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 levels of 500 apples, 1,500 apples, and 2,500 apples, respectively. Consumption Level Plan A Plan B (Quantity of apples) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (P nt) (Percent) (Percent) 500 1,500 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

Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A Plan B • Consumption up to 1,000 apples is taxed at 50%. • Consumption up to 2,000 apples is taxed at 10%. • Consumption higher than 1,000 apples is taxed at 20%. • Consumption higher than 2,000 apples is taxed at 25%. 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 levels of 500 apples, 1,500 apples, and 2,500 apples, respectively. Consumption Level Plan A Plan B (Quantity of apples) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (P nt) (Percent) (Percent) 500 1,500 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

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
ChapterST1: Government Spending And Taxation
Section: Chapter Questions
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Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A Plan B • Consumption up to 1,000 apples is taxed at 50%. Consumption up to 2,000 apples is taxed at 10%. • Consumption higher than 1,000 apples is taxed at 20%. Consumption higher than 2,000 apples is taxed at 25%. 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 levels of 500 apples, 1,500 apples, and 2,500 apples, respectively. Consumption Level Plan A Plan B (Quantity of apples) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 1,500 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
Transcribed Image Text:Consider the economy of Pomistan, where citizens consume only apples. Assume that apples are priced at $1 each. The government has devised the following tax plans: Plan A Plan B • Consumption up to 1,000 apples is taxed at 50%. Consumption up to 2,000 apples is taxed at 10%. • Consumption higher than 1,000 apples is taxed at 20%. Consumption higher than 2,000 apples is taxed at 25%. 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 levels of 500 apples, 1,500 apples, and 2,500 apples, respectively. Consumption Level Plan A Plan B (Quantity of apples) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 500 1,500 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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