Suppose T = .02S1^$\alpha$.If taxes are progressive which of the following is true? A) $\alpha$ 1 B) 0

Name: Suppose T = .02S1 $\alpha$ .If taxes are progressive which of the following is true? A) $\alpha$ > 1 B) 0 < $\alpha$< 1 C) $\alpha$ = 1 D) $\alpha$ = 0
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Question

Suppose T = .02S1^$\alpha$.If taxes are progressive which of the following is true? A) $\alpha$ > 1 B) 0 < $\alpha$< 1 C) $\alpha$ = 1 D) $\alpha$ = 0

Quizplus · Accepted Answer

In a progressive tax system, the tax rate increases as the taxable amount increases. This implies that the tax T should increase at a faster rate than the increase in S1, which is only possible if $\alpha$ > 1.

Suppose T = α\alphaα If Taxes Are Progressive Which of the Following Is True

Suppose T = $\alpha$ If Taxes Are Progressive Which of the Following Is True