Suppose $T = .02 I ^ { \alpha }$ .If taxes are proportional which of the following is true? A) $\alpha1$ B) $0

Question

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

Quizplus · Accepted Answer

Proportional taxes imply that the tax rate remains constant as the tax base (I, in this case) increases, which corresponds to $\alpha = 1$ in the equation $T = .02 I ^ { \alpha }$, indicating a direct, linear relationship between tax (T) and income (I).

Suppose T=.02IαT = .02 I ^ { \alpha }T=.02Iα If Taxes Are Proportional Which of the Following Is True

Suppose $T = .02 I ^ { \alpha }$ If Taxes Are Proportional Which of the Following Is True