The accompanying table illustrates annual salaries and income tax owed by five individuals. Apart from the fact that they receive different salaries and owe different amounts of income tax, these five individuals are otherwise identical.

Name Annual salary Annual income tax owed Susan $22,000 $3,304 Eduardo 63,000 14,317 John 3,000 454 Camila 94,000 23,927 Peter 37,000 7,020

a. If you were to plot these points on a graph, what would be the average slope of the curve between the points for Eduardo’s and Camila’s salaries and taxes using the arc method? How would you interpret this value for slope?

b. What is the average slope of the curve between the points for John’s and Susan’s salaries and taxes using the arc method? How would you interpret that value for slope?

c. What happens to the slope as salary increases? What does this relationship imply about how the level of income taxes affects a person’s incentive to earn a higher salary?