The Average Tax Rate

question 35

Multiple Choice

The average tax rate

• A) can be calculated by summing all the marginal tax rates up to the level of income for which the average is being calculated.
• B) is the marginal tax rate divided by the total tax.
• C) is the percentage of income paid as taxes.
• D) equals income divided by amount of taxes paid.
• E) equals the marginal tax rate multiplied by total taxable income.

---

Definitions:

Monopolistically Competitive

A market structure in which many companies sell products that are similar but not identical, allowing for competition based on quality, price, and marketing.

Allocative Efficiency

A state of the economy where resources are distributed according to consumer preferences in a way that maximizes overall welfare.

Productive Efficiency

A situation in which an economy or a production process can no longer produce more of one good without sacrificing the production of another good and occurs at any point on the production possibility frontier.

Product Variety

The range of different products or services offered by a company or available in a market.