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4th Edition

James Stewart

Publisher: Cengage Learning

ISBN: 9781337687805

Chapter 1.1, Problem 61E

a.

To determine

Sketch the graph of the tax rate

Expert Solution

**Given information:**

In a certain country, income tax is assessed as follows. There is no tax on income up to

Sketch the graph of the tax rate

**Calculation: **

Suppose

Now we have been given that, there is no tax income up to

So

If the income

So

If the income is more than

Then

Now we can write the tax rate

Now we can draw a graph,

b.

To determine

How much tax is assessed on an income of

Expert Solution

**Given information:**

In a certain country, income tax is assessed as follows. There is no tax on income up to

How much tax is assessed on an income of

**Calculation: **

We have to calculate tax on income of

There is no tax if income

So non-taxable income is =

Then taxable income is =

Since the total income is in the interval

So the income tax =

Hence,

Now, we have to calculate the tax on income of

First we have to break this

Tax on first

Tax on second

Tax on last

Then total tax on income of

Hence, the

c.

To determine

Sketch the graph of the total assessed tax

Expert Solution

**Given information:**

In a certain country, income tax is assessed as follows. There is no tax on income up to

Sketch the graph of the total assessed tax

**Calculation: **

Since there is no tax if income

If the income

Maximum taxable income in the interval is

Then maximum tax in this interval =

Hence curve passes through the point

Now if income tax

So tax T (I) =

Or

Hence the graph of tax