If the Marginal Tax Rate Is Greater Than the Average

question 98

Multiple Choice

If the marginal tax rate is greater than the average tax rate as taxable income increases, the tax structure is

• A)regressive.
• B)proportional.
• C)progressive.
• D)unfair.

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Definitions:

Fixed Costs

Costs that do not change with the level of output or production, such as rent, salaries, or loan payments.

Variable Costs

Costs that change in proportion to the amount of goods or services produced.

Average Total Cost

The sum of all production costs divided by the quantity of output produced, yielding the cost per unit on average.

Output

The complete sum of products or services created by an enterprise, field, or economic entity.