If Lex's Income Increases from $30,000 to $40,000 and His

question 296

Multiple Choice

If Lex's income increases from $30,000 to $40,000 and his tax liability increases from $6,000 to $10,000, which of the following is true?

• A) His marginal tax rate is 20 percent in this range.
• B) His average tax rate is 40 percent at his new income level of $40,000.
• C) He faces a regressive tax in this income range.
• D) He faces a progressive tax in this income range.

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Definitions:

Coefficient Of Determination

A statistical measure, often denoted as R^2, that represents the proportion of the variance for a dependent variable that's explained by an independent variable or variables in a regression model.

SSE

Sum of Squared Errors, which measures the total deviation of response values from the fit values in statistical models.

SST

Sum of Squares Total, a statistical measure that represents the total variance in a dataset.

Correlation Coefficient

A statistical measure that describes the extent of the linear relationship between two variables, ranging from -1 to 1.