-When Taxable Income Rises from $40,000 to $50,000,
A)your Average

question 119

Multiple Choice

$$\begin{array}{l}\begin{array} { c c } \text { Taxable Income} &\text { Taxes Paid }\\\$ 10,000 & 0 \\20,000 & 1,000 \\30,000 & 2,000 \\40,000 & 4,000 \\50,000 & 8,000\end{array}\end{array}$$
-When taxable income rises from $40,000 to $50,000,

• A)your average tax rate is greater than your marginal tax rate.
• B)your marginal tax rate is greater than your average tax rate.
• C)your marginal and average tax rates are equal.
• D)it is impossible to determine if your average or marginal tax rate is higher.

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Definitions:

Critical Thinking

The ability to analyze facts, generate and organize ideas, defend opinions, make comparisons, draw inferences, evaluate arguments and solve problems.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses.

Framing Effect

The influence on decision making caused by the way information is presented, rather than the actual information itself.

Base-Rate Error

A cognitive bias where people misjudge the likelihood of an event by ignoring general prevalence.