Ronald Is a Consultant for Economic Forecasters, Inc

question 9

Multiple Choice

Ronald is a consultant for Economic Forecasters, Inc. In an effort to minimize his tax liability he enters into a legal contract transferring 25% of the fees from a new consulting contract to his son Ken, who is 42, and owns a pest control business. Which of the following statements concerning the transaction is correct?
I.The assignment-of-income doctrine does not apply if Ken and Ronald are in the same marginal tax bracket.
II.The assignment-of- income doctrine does not apply if Ronald's son is under age 14.
​

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

---

Definitions:

Average Total Cost

Average total cost is calculated by dividing the total cost of producing a given output level by the quantity of output, reflecting the average cost per unit of output produced.

Total Profit

The net income a business earns after subtracting all costs, expenses, and taxes from the total revenue.

Per Unit Profit

The profit earned from selling one unit of a product, calculated by subtracting the cost per unit from the selling price per unit.

MR = MC Rule

A principle in economics where the optimal level of output is reached when marginal revenue equals marginal cost.