7.2.2Practice: Investigate Taxes and Income Distribution

Use the information in the table below to answer questions 1 and 2.
Who has the median income in this group?

Ezme

Use the information in the table below to answer questions 1 and 2.
What is the cumulative income of the median-income earner in this group?

117000

Use the table of tax rates below to answer questions 3 through 7.
What tax is paid by someone who earns $60,000?

5550

What is the average tax rate (rounded to the nearest tenth of a percentage point) for someone who earns $60,000?

9.3

What is the average tax rate (rounded to the nearest tenth of a percentage point) for someone who earns $100,000?

13.6

What is the marginal tax rate (rounded to the nearest tenth of a percentage point) for someone whose income increases from $50,000 to $80,000?

17.3

What is the marginal tax rate (rounded to the nearest tenth of a percentage point) for someone whose income increases from $80,000 to $100,000?

20.0

What happens when the government increases the tax rate paid by the seller of a good?

The supply curve shifts to the left.

What happens when the government begins charging a per-unit tax on a previously untaxed good?

The quantity sold decreases.

A new tax of $0.10 per pack of gum decreases the equilibrium quantity from 100,000 packs to 95,000 packs. How much revenue does the government collect on this new tax?

9500