Suppose That a State's Tax Code States That Tax Liability

question 63

Multiple Choice

Suppose that a state's tax code states that tax liability is % on the first of taxable earnings and % on the remainder. Find the constants a and b in the tax function T(x) that make the function T(x) continuous.

• A) and
• B) and
• C) and
• D) and

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Definitions:

Price Elasticity

The measure of how much the quantity demanded of a good responds to a change in its price.

Demand Schedule

A table that shows the quantity of a good that consumers are willing to purchase at different prices.

Total Revenues

The total amount of income generated by the sale of goods or services before any expenses are subtracted.

Perfectly Inelastic

A market demand situation where the quantity demanded remains constant regardless of changes in price.