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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 $ each. The government of Leguminville has developed two different tax schemes, the details of which are outlined below:
Plan
Consumption up to artichokes is taxed at
Consumption higher than artichokes is taxed at
Plan
Consumption up to artichokes is taxed at
Consumption higher than artichokes is taxed at
Use the Plan 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 artichokes, artichokes, and artichokes, respectively.
Consumption Level
Quantity of artichokes
Plan
Marginal Tax Rate Average Tax Rate
Percent
Plan
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.
tableProgressive,Proportional,RegressivePlan XPlan Y
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