Question 1
Refer to Scenario 19.2 below to answer the question(s) that follow.
SCENARIO 19.2: An individual earning $40,000 pays $3,200 in taxes. The marginal tax rate on any income earned above $40,000 is 20%.
Refer to Scenario 19.2. When this person earns $60,000, her average tax rate is
◦ 12%.
◦ 14%.
◦ 20%.
◦ indeterminate from this information.
Question 2
Refer to Scenario 19.2 below to answer the question(s) that follow.
SCENARIO 19.2: An individual earning $40,000 pays $3,200 in taxes. The marginal tax rate on any income earned above $40,000 is 20%.
Refer to Scenario 19.2. Suppose this person earns $60,000 and gives a tax deductible donation of $1,000 to charity. The donation will reduce her tax payment by
◦ $80.
◦ $120.
◦ $200.
◦ $1,000.
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Answer
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