2. Suppose George made $20,000 last year and that he lives in the country of Harmony. The way Harmony levies income taxes, each citizen must pay 10 percent in taxes on their first $10,000 in earnings and then 50 percent in taxes on anything else they might earn. So given that George earned $20,000 last year, his marginal tax rate on the last dollar he earns will be __________ and his average tax rate for his entire income will be _________________. LO20.3

a. 50 percent; 50 percent.

b. 50 percent; less than 50 percent.

c. 10 percent; 50 percent.

d. 10 percent; less than 50 percent.