Suppose the income tax rate is 0 percent on the first 10,000; 10 ...

[karen]

Suppose the income tax rate is 0 percent on the first 10,000; 10 percent on the next 20,000; 20 percent on the next 20,000; 30 percent on the next 20,000; and 40 percent on all income above 70,000.
 
  Family A has income of 82,000 while Family B has income of 37,000. What are the marginal tax rates faced by the two families?

Question 2

Rational behavior for an economist means that individuals
 
  A) are motivated by self-interest.
  B) never change their minds.
  C) always make positive choices.
  D) are self-sacrificing.

[mohan]

Answer to Question 1

Since Family A's income (82,000 ) is in the last bracket, their marginal tax rate is 40 percent. Since Family B's income (37,000 ) is in the third bracket, their marginal tax rate is 20 percent.

Answer to Question 2

A