$$\begin{array}{l}
\begin{array} { c c }
\text { Taxable Income} &\text { Taxes Paid }\
\$ 10,000 & 0 \
20,000 & 1,000 \
30,000 & 2,000 \
40,000 & 4,000 \
50,000 & 8,000
\end{array}
\end{array}$$
-When taxable income rises from $40,000 to $50,000,

Question

$$\begin{array}{l}
\begin{array} { c c } 
\text { Taxable Income} &\text { Taxes Paid }\
\$ 10,000 & 0 \
20,000 & 1,000 \
30,000 & 2,000 \
40,000 & 4,000 \
50,000 & 8,000
\end{array}
\end{array}$$
-When taxable income rises from $40,000 to $50,000,

Quizplus · Accepted Answer

The marginal tax rate is the rate at which the last dollar of income is taxed. From $40,000 to $50,000, taxes increase from $4,000 to $8,000, which means the marginal tax rate on the additional $10,000 is 40% ($4,000/$10,000). The average tax rate at $50,000 is $8,000/$50,000 = 16%. Therefore, the marginal tax rate (40%) is greater than the average tax rate (16%).

-When Taxable Income Rises from $40,000 to $50,000, A)your Average

-When Taxable Income Rises from $40,000 to $50,000,
A)your Average