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Plan B p to 1,000 oranges is taxed at 5%. • Consumption up to 2,000 oranges i igher than 1,000 oranges is taxed at 40%. Consumption higher than 2,000 ora

Plan B p to 1,000 oranges is taxed at 5%. • Consumption up to 2,000 oranges i igher than 1,000 oranges is taxed at 40%. Consumption higher than 2,000 ora

College Algebra
College Algebra
10th Edition
ISBN:9781337282291
Author:Ron Larson
Publisher:Ron Larson
Chapter6: Systems Of Equations And Inequalities
Section: Chapter Questions
Problem 21T: A manufacturer produces two models of television stands. The table at the left shows the times (in...
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Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges are priced at $1 each. The government has devised the following tax plans:
 
3. Understanding marginal and average tax rates Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges are priced at $1 each. The government has devised the following tax plans: Plan A Plan B • Consumption up to 1,000 oranges is taxed at 5%. • Consumption up to 2,000 oranges is taxed at 35%. • Consumption higher than 1,000 oranges is taxed at 40%. • Consumption higher than 2,000 oranges 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 700 oranges, 1,400 oranges, and 2,500 oranges, respectively. Consumption Level Plan A Plan B (Quantity of oranges) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 700 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
Transcribed Image Text:3. Understanding marginal and average tax rates Consider the economy of Citronia, where citizens consume only oranges. Assume that oranges are priced at $1 each. The government has devised the following tax plans: Plan A Plan B • Consumption up to 1,000 oranges is taxed at 5%. • Consumption up to 2,000 oranges is taxed at 35%. • Consumption higher than 1,000 oranges is taxed at 40%. • Consumption higher than 2,000 oranges 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 700 oranges, 1,400 oranges, and 2,500 oranges, respectively. Consumption Level Plan A Plan B (Quantity of oranges) Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate (Percent) (Percent) (Percent) (Percent) 700 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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