A Local Government Currently Has a Tax Base of $10

question 121

Multiple Choice

A local government currently has a tax base of $10 billion and a tax rate of 10 percent. If the tax rate is increased to 12 percent, the tax base becomes $8.5 billion. If the goal is to maximize tax revenues the tax rate should be

• A)raised above 12 percent.
• B)kept at 10 percent.
• C)raised to 12 percent.
• D)abolished.

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Definitions:

Average Error

A statistical measure that averages the absolute differences between the observed values and the values predicted by a model.

Independent Variable

The variable that is manipulated in an experiment to observe its effect on the dependent variable.

Dependent Variable

A variable in an experiment or model that is expected to change in response to changes in independent variables.

Perfect Correlation

Perfect correlation occurs when two variables move in unison, either directly (perfect positive correlation) or inversely (perfect negative correlation), with a correlation coefficient of +1 or -1, respectively.