2.4 Taxes in Oz are calculated according to the formula T
.01I 2

, where T represents thousands of dollars of tax liability and I represents income measured in thousands of dollars. Using this formula, answer the following questions:

a. How much tax do individuals with incomes of $10,000, $30,000, and $50,000 pay? What are the average tax rates for these income levels? At what income level does tax liability equal total income?

b. Graph the tax schedule for Oz. Use your graph to estimate marginal tax rates for the income levels specified in part (a). Also show the average tax rates for these income levels on your graph.

c. Marginal tax rates in Oz can be estimated more precisely by calculating tax owed if persons with the incomes in part

(a) get one more dollar. Make this computation for these three income levels. Compare your results by calculating the marginal tax rate function using calculus.