Economists define the disposable annual income for an individual by the equation D = (1 - r)T, where T is the individual's total income and r is the net rate at which he or she is taxed. What is the disposable income for an individual whose income is $20,000 and whose net tax rate is 31%?

Question

Economists define the disposable annual income for an individual by the equation D = (1 - r)T, where T is the individual's total income and r is the net rate at which he or she is taxed. What is the disposable income for an individual whose income is $20,000 and whose net tax rate is 31%? ​

Quizplus · Accepted Answer

The equation for disposable income is D = (1 - r)T. 
Substituting T = $20,000 and r = 0.31 gives: 
D = (1 - 0.31)($20,000) = $13,800. 
Therefore, the correct answer is choice D.

Economists Define the Disposable Annual Income for an Individual by the Equation