Suppose There Is a Linear Relationship Between National Income and Total

question 91

Multiple Choice

Suppose there is a linear relationship between national income and total tax revenue.If national income is $100 million,then $25 million is collected as tax revenue .If national income is $200 million,then $40 million is collected in tax revenue.What is the marginal response in tax revenue to a change in national income?

• A)15 million
• B)0.15 million
• C)15
• D)0.15
• E)-15

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Definitions:

Demand Curve

A graph showing the relationship between the price of a product and the quantity of the product that consumers are willing and able to purchase at various prices.

Quantity Demanded

The total amount of a good or service that consumers are willing and able to purchase at a specific price level within a certain period.

Income Response

The change in consumers' buying behavior resulting from a change in their income.

Price Elasticity

A measure of how much the demand for a product or service changes in response to a change in its price, indicating its sensitivity or responsiveness.