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Understanding marginal and average tax rates Consider the imaginary nation of Leguminville, whose citizens only consurne artichokes. Assume that the price of artichokes is $

Understanding marginal and average tax rates
Consider the imaginary nation of Leguminville, whose citizens only consurne artichokes. Assume that the price of artichokes is $1 each. The government of Leguminville has developed two different tax schemes, the details of which are outlined below:
Plan x
Consumption up to 1,000 artichokes is taxed at 5%.
Consumption higher than 1,000 artichokes is taxed at 40%.
Plan Y
Consumption up to 2,000 artichokes is taxed at 40%.
Consumption higher than 2,000 artichokes is taxed at 10%.
Use the Plan x and Plan Y 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 artichokes, 1,400 artichokes, and 2,500 artichokes, respectively.
Consumption Level
(Quantity of artichokes)
Plan x
Marginal Tax Rate Average Tax Rate
(Percent)
6001,4002,500
Plan Y
Marginal Tax Rate Average Tax Rate
(Percent)
(Percent)
Complete the following table by indicating whether each plan is a progressive tax system, a proportional tax system, or a regressive tax system.
\table[[,Progressive,Proportional,Regressive],[Plan X,0,,],[Plan Y,0,,]]
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