Becky's average tax rate on her November income is 15 percent.The marginal tax rate on her December income of $10,000 exceeds her average tax rate.The tax liability on her December income will be

Question

Quizplus · Accepted Answer

Since Becky's average tax rate on her November income is 15%, we know that she paid 15% in taxes on that income. However, we also know that the marginal tax rate on her December income of $10,000 exceeds her average tax rate. This means that the tax rate that applies to the last dollar of her December income is higher than 15%. Therefore, her tax liability on her December income will be greater than what she paid on her November income. Since her December income is $10,000, her tax liability will be higher than $1,500, making choice C the correct answer.

Becky's Average Tax Rate on Her November Income Is 15