If a Person Were in the 20% Tax Bracket and Given

question 1

Multiple Choice

If a person were in the 20% tax bracket and given the choice of a $500 credit or a $2500 deduction

• A)he would take the deduction every time.
• B)he would take the credit every time.
• C)he would not care. They would constitute the same tax benefit.
• D)he would not qualify for either.

---

Definitions:

Marginal Benefit

The supplemental value or usefulness derived from using another unit of a good or service.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a good or service.

Net Benefit

The total positive impact or gain subtracted by the total cost or negative impact, typically used in the analysis of business or policy decisions.

Marginal Benefit (MB)

The augmented satisfaction or usefulness obtained by consuming or producing one extra unit of a good or service.