Suppose the government imposes a tax of 20 percent on the first $50,000 of income and 30 percent on all income above $50,000. What is the average tax rate when income is $60,000?

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The tax on the first $50,000 is 20%, which is $10,000. The tax on the remaining $10,000 (from $50,000 to $60,000) is 30%, which is $3,000. The total tax is $13,000. The average tax rate is $13,000 divided by $60,000, which is approximately 21.7 percent.

Suppose the Government Imposes a Tax of 20 Percent on the First