Pat Calculates That for Every Extra Dollar She Earns, She

question 334

Multiple Choice

Pat calculates that for every extra dollar she earns, she owes the government 33 cents. Her total income now is $35,000, on which she pays taxes of $7,000. Determine her average tax rate and her marginal tax rate.

• A)Her average tax rate is 33 percent and her marginal tax rate is 20 percent.
• B)Her average tax rate is 20 percent and her marginal tax rate is 33 percent.
• C)Her average tax rate is 20 percent and her marginal tax rate is 20 percent.
• D)Her average tax rate is 33 percent and her marginal tax rate is 33 percent.

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Definitions:

Network Theory

A theoretical framework that analyzes social, economic, or natural phenomena in terms of nodes and the connections between them, emphasizing the importance of relationships and interactions.

Rational Choice Theory

An economic principle that assumes individuals always make decisions that provide them with the highest level of personal utility.

Positivism

A philosophical theory stating that certain ("positive") knowledge is based on natural phenomena and their properties and relations as verified by the empirical sciences.

Rational Actors

Individuals or entities that make decisions based on logical reasoning, often within the context of economic theory, aiming to maximize utility or benefit.