Suppose the government taxes 10 percent of the first $40,000 of income and 20 percent of all income over $40,000. Shahina paid $10,000 in taxes. What were her marginal and average tax rates?
A) 20 percent and 15 percent, respectively
B) 20 percent and 14 percent, respectively
C) 10 percent and 15 percent respectively
D) 10 percent and 14 percent respectively
Correct Answer:
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