6. Understanding marginal and average tax rates

Please solve the problem below and fill in the answers in the box

Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devised the following tax plans:

Plan A

	Consumption up to 1,000 coconuts is taxed at 5%.
	Consumption higher than 1,000 coconuts is taxed at 40%.

Plan B

	Consumption up to 2,000 coconuts is taxed at 40%.
	Consumption higher than 2,000 coconuts is taxed at 10%.

Use the Plan A and Plan B tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption levels of 600 coconuts, 1,400 coconuts, and 2,500 coconuts, respectively.

Consumption Level	Plan A		Plan B
(Quantity of coconuts)	Marginal Tax Rate	Average Tax Rate	Marginal Tax Rate	Average Tax Rate
	(Percent)	(Percent)	(Percent)	(Percent)
600
1,400
2,500

Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system.

	Progressive	Proportional	Regressive
Plan A
Plan B