Sammy, Age 31, Is Unmarried and Is Not an Active

question 34

Multiple Choice

Sammy, age 31, is unmarried and is not an active participant in a qualified retirement plan. His modified AGI is $55,000 in 2014. The maximum amount that Sammy can deduct for a contribution to a traditional IRA is:

• A) $2,800.
• B) $3,500.
• C) $5,000.
• D) $5,500.
• E) None of the above.

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Definitions:

Isoquant

An isoquant is a curve that represents all the combinations of inputs that produce the same level of output in the production process.

Slope

In mathematics and economics, it is the measure of the steepness or incline of a line, often representing the rate of change between two variables.

Isoquant Map

Graph combining a number of isoquants, used to describe a production function.

Marginal Returns

The additional output gained from increasing one unit of an input while keeping other inputs constant.