Suppose There Are Two People in a Society That Has

question 21

Multiple Choice

Suppose there are two people in a society that has a 50% income tax.Both people have pretax incomes of $40,000.In period 1,there was no tax deduction; Lillian gave $6,000 to charity,and Susie gave $4,000 to charity.In period 2,the government makes charitable donations tax deductible,and Lillian gives $8,000 to charity.What is the amount Susie must give in period 2 so that the marginal impact of the tax break is exactly twice the inframarginal impact of the tax break?

• A) $7,000
• B) $8,000
• C) $10,000
• D) $12,000

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Definitions:

Self-Knowledge

Understanding or knowledge an individual has about themselves, including their characteristics, emotions, likes, and dislikes.

Withholding Secrets

The act of intentionally keeping information hidden from others, especially information that is personal or confidential.

Self-Respect

Positive self-image with high self-esteem.

Unknown Pane

Unknown Pane refers to an aspect or area that is not known or yet to be discovered.