What Is the Difference Between the Average and Marginal Tax

question 37

Multiple Choice

What is the difference between the average and marginal tax rates' effects on the labour supply?

• A)An increase in the average tax rate will increase labour supply,but an increase in the marginal tax rate will decrease labour supply.
• B)An increase in the average tax rate will decrease labour supply,but a decrease in the marginal tax rate will decrease labour supply.
• C)There is no difference.An increase in the average tax rate and the marginal tax rate will increase labour supply.
• D)There is no difference.An increase in the average tax rate and the marginal tax rate will decrease labour supply.

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Definitions:

Control Group

A group in an experiment or study that does not receive treatment, used as a benchmark to measure the effects of the treatment.

Natural Experiments

Observational studies where the conditions are naturally occurring rather than being controlled or manipulated by the researcher, used to infer causality.

Random Experiments

Procedures or trials that yield different outcomes, each with a specific probability, even when repeated under the same conditions.

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Individuals who have received vaccinations, which are medical treatments that provide immunity against one or several diseases.