Bert Faces a Progressive Tax Structure That Has the Following

question 179

Multiple Choice

Bert faces a progressive tax structure that has the following marginal tax rates: 0 percent on the first $10,000, 10 percent on the next $10,000, 15 percent on the next $10,000, 25 percent on the next $10,000, and 50 percent on all additional income. If Bert earns $75,000, what is his average tax rate?

• A)20 percent
• B)25 percent
• C)30 percent
• D)36.67 percent

---

Definitions:

Supply of Loanable Funds

The total amount of funds available for borrowing in the economy, determined by savings and influenced by interest rates.

Perfectly Elastic

Describes a situation in demand or supply where quantity changes by an infinite amount in response to any change in price.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs, representing the surplus generated from business operations beyond the normal returns.

Hired Managers

Individuals employed by the owners of a firm to run the day-to-day operations and make business decisions.