The Average Tax Rate Is the

question 105

Multiple Choice

The average tax rate is the

• A) percentage of an additional dollar of income paid in tax.
• B) percentage of income paid in tax.
• C) total amount of taxes paid by an individual.
• D) average of the rates at which income and taxes increase.
• E) same as the marginal tax rate for a progressive tax.

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Definitions:

Efficient Level

The point at which a system or process is operating at maximum potential without waste of resources.

MSC (Marginal Social Cost)

The complete expenditure for society to create an extra unit of a product or service, covering both personal costs and any additional external expenses.

MC (Marginal Cost)

The cost of producing an additional unit of a good or service.

P (Price)

The amount of money required to purchase a good or service, determined by the interaction of supply and demand in the market.