1. Refer to Table 1 . If Danielle Has $38,000 in Taxable Income, Her Tax Liability Will Be

Table 1

On Taxable Income ... / The Tax Rate is ...
Up to $7,150 / 10%
From $7,150 to $29,050 / 15
From $29,050 to $70,350 / 25
From $70,350 to $146,750 / 28
From $146,750 to $319,100 / 33
Over $319,100 / 35

1. Refer to Table 1. If Danielle has $38,000 in taxable income, her tax liability will be

a.$2,237.50.

b.$3,800.

c.$6,237.50.

d.$9,500.

2.Refer to Table 1. If Chris has $100,000 in taxable income, his tax liability will be

a.$8,302.

b.$22,627.

c.$28,000.

d.$29,650.

3. Refer to Table 1. If Morgan has $29,050 in taxable income, her tax liability will be

a.$2,905.

b.$3,285.

c.$4,000.

d.$4,357.50.

4.Caroline, John, and Jackie each like historical biographies. The current bestseller costs $25. Caroline values it at $30, John at $28, and Jackie at $26. Suppose that if the government taxes books at $2 each, the selling price will rise to $27. A consequence of the tax is that

a.consumer surplus shrinks by $9 and tax revenues increase by $6, so there is a deadweight loss of $3.

b.consumer surplus shrinks by $6 and tax revenues increase by $6, so there is no deadweight loss.

c.consumer surplus shrinks by $5 and tax revenues increase by $6, so there is no deadweight loss.

d.consumer surplus shrinks by $5 and tax revenues increase by $4, so there is a deadweight loss of $1.

5. Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000?

a.12 percent and 20 percent, respectively

b.12 percent and $50,000, respectively

c.$6,000 and 12 percent, respectively

d.$6,000 and 20 percent, respectively

6. If your income is $40,000 and your income tax liability is $5,000, your

a.marginal tax rate is 8 percent.

b.average tax rate is 8 percent.

c.marginal tax rate is 12.5 percent.

d.average tax rate is 12.5 percent.

7. Suppose that the government taxes income in the following fashion: 30 percent of the first $20,000, 50 percent of the next $30,000, and 60 percent of all income over $50,000. George earns $40,000, and Elaine earns $60,000. Which of the following statements is correct?

a.George's marginal tax rate is 60 percent, and his average tax rate is 50 percent.

b.George's marginal tax rate is 50 percent, and his average tax rate is 40 percent.

c.Elaine's marginal tax rate is 50 percent, and her average tax rate is 45 percent.

d.Elaine's marginal tax rate is 60 percent, and her average tax rate is 40 percent

Table 2

Income / Tax rate
$0 to $40,000 / 25%
$40,001 to $100,000 / 40%
Over $100,000 / 60%

8.Refer to Table 2. What is the marginal tax rate for a person who makes $35,000?

a.25%

b.30%

c.40%

d.60%

9.Refer to Table 12-6. What is the marginal tax rate for a person who makes $50,000?

a.25%

b.28%

c.40%

d.60%

10.Refer to Table 12-6. What is the marginal tax rate for a person who makes $130,000?

a.30%

b.40%

c.50%

d.60%

11.Refer to Table 12-6. What is the average tax rate for a person who makes $130,000?

a.30%

b.40%

c.50%

d.60%