Suppose the government imposes a tax of 10 per cent on the first $24 000 of income and
20 per cent on all incomes above $24 000, what are the tax liability and the average tax rate for a person whose income is $48 000?
A)10 per cent and 20 per cent, respectively
B)10 per cent and $24 000, respectively
C)$7200 and 15 per cent, respectively
D)$7200 and 20 per cent, respectively

Question

Quizplus · Accepted Answer

The tax liability for the first $24,000 is 10% of $24,000 = $2,400. For the remaining $24,000 (since the total income is $48,000), the tax rate is 20%, which equals $4,800. Therefore, the total tax liability is $2,400 + $4,800 = $7,200. The average tax rate is the total tax liability divided by the total income: $7,200 / $48,000 = 15%.

Suppose the Government Imposes a Tax of 10 Per Cent