Find the mean average tax rate for the population

Reference no: EM131209214

Consider a tax system where the first $5,000 of income is tax free, the next $10,000 is taxed at 25 percent, and all income above $15,000 is taxed at 50 percent. There is a population of consumers with who earn wages between $2 and $32 per hour. Wages are uniformly distributed in the population. All consumers have preferences described by U = log(C) - L/1;000:

a. Find the mean average tax rate for the population.

b. Find the mean marginal tax rate for the population. How do these mean rates differ from the actual rates?

Reference no: EM131209214

Questions Cloud

Rate of economic growth in the endogenous growth model : ‘‘If the government can increase the exigency of human capital accumulation, it could persistently raise the rate of economic growth in the endogenous growth model.'' True or false? Explain your answer.

Economic interpretation of sing : What is the economic interpretation of this sing? Find Determine its sing. What is the economic interpretation of this sing?

Profit is the incentive to innovate : ‘‘Profit is the incentive to innovate. Government intervention can only reduce it, and therefore stifle the innovation process.'' Discuss the expected relation between taxation and growth in the light of this statement.

When is the market for money in equilibrium : Show on a graph how the interest rate and the quantity demanded of money are related.- Do the same for the quantity supplied of money.

Find the mean average tax rate for the population : Find the mean marginal tax rate for the population. How do these mean rates differ from the actual rates?

Fundamentals of financial accounting journal entries : BA 211Fundamentals of Financial Accounting Journal entries for all transactions through the end of year (Dec. 31st) and End of year unadjusted trial balance - Adjusting journal entries for end of year adjusting transactions

Assessing a firm performance : Why is return on equity one of the key financial ratios used for assessing a firm's performance?. If a firm's ROE is low and management wants to improve it, explain how using more debt might help

Prepare an income statement for blue spruce corp : Prepare an income statement for Blue Spruce Corp. for the year ended April 30, 2017. Prepare a retained earnings statement for Blue Spruce Corp. for the year ended April 30, 2017.

What increase in this mean rate of tax has the same effect : Does the use of the mean marginal rate provide a good indication of the labor supply response?

User Account

All Pages