Suppose that the government taxes income in the following fashion: 20 percent of the first $50,000,40 percent of the next $50,000,and 60 percent of all income over $100,000.John earns $200,000,and Theresa earns $600,000.Which of the following statements is correct?
A) John's marginal tax rate is higher than Theresa's marginal tax rate.
B) John's average tax rate is higher than his marginal tax rate.
C) Theresa's average tax rate is higher than her marginal tax rate.
D) Theresa's average tax rate is higher than John's average tax rate.
Correct Answer:
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