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Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts cost $1 each, and each person can buy at most 5,000 coconuts.
Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts cost $1 each, and each person can buy at most 5,000 coconuts. The government has devised the following tax plans: Plan A: Consumption up to 1,000 coconuts is taxed at 20%. Consumption higher than 1,000 coconuts is taxed at 80%. Plan B: Consumption up to 2,000 coconuts is taxed at 30%. Consumption higher than 2,000 coconuts is taxed at 10%. Derive the marginal and average tax rates under each tax plan at the consumption levels of 500 coconuts, 1,500 coconuts, and 2,500 coconuts, respectively
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