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Author Question: Consider a world with two income earners and an income tax. Individual A earns 25,000 and pays 1,000 ... (Read 428 times)

vicotolentino

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on: Jul 1, 2018
Consider a world with two income earners and an income tax. Individual A earns 25,000 and pays 1,000 in taxes. Individual B earns 100,000 and pays 3,000 in taxes. Which of the following best classifies the income tax system in this world?
 
  a. proportional
  b. progressive
  c. regressive
   d. consumption

Question 2

Lisa consumes only pizzas and burritos. In equilibrium, her marginal utility of pizza is 20 and her marginal utility of a burrito is 10. The price of a pizza is 4. What is the price of a burrito?
 
  What will be an ideal response?


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beccamahon

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Reply #1 on: Jul 1, 2018
Answer to Question 1

c

Answer to Question 2

In equilibrium, the ratio of the marginal utility of a pizza divided by the price of a pizza must equal the marginal utility of a burrito divided by the price of a burrito. Thus, the price of a burrito must be 2.


vicotolentino

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Reply #2 on: Jul 1, 2018
Thank you


beccamahon

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Reply #3 on: Jul 1, 2018
No problemo


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