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Suppose that an individual faces a marginal tax rate of 40 percent on all income. If he cheats on his taxes, he will face a
Suppose that an individual faces a marginal tax rate of 40 percent on all income. If he cheats on his taxes, he will face a marginal penalty of 10R, where R is the amount of income in thousands of dollars that is not reported. There is a 20 percent chance of getting caught. How much income will this individual fail to report?
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