Economists define the disposable annual income for an individual by the equation D = (1 - r)T, where T is the individual's total income and r is the net rate at which he or she is taxed. What is the disposable income for an individual whose income is $90,000 and whose net tax rate is 35%?
A) $31,500
B) $58,500
C) $148,500
D) $90,000
E) $207,000

Question

Quizplus · Accepted Answer

Given, 
T (total income) = $90,000 
r (net tax rate) = 35%

Using the formula, 
D (disposable income) = (1 - r)T
D = (1 - 0.35) x $90,000
D = 0.65 x $90,000
D = $58,500

Therefore, the disposable income for the individual is $58,500. Option B is correct.

Economists Define the Disposable Annual Income for an Individual by the Equation