Assignment 2
Please read chapters 3&4 and answer the following questions:
Chapter 3 Questions
1-) (Tax Rates) Suppose taxes are related to income level as follows: Income Tax $1,000 $200 $2,000 $350 $3,000 $450
a. What percent of income is paid in taxes at each level? The person with $1,000 income will pay 20% in taxes (200/1000). The person with $2,000 income will pay 17.5% in taxes. (350/2000) The person with $3,000 income will pay 15% in taxes. (450/3000)
b. Is the tax rate progressive, proportional, or regressive?
The tax rate is regressive because the tax rate decreases as income increases.
2-) What are the major …show more content…
a) A major war began in the oil-rich Middle East. = The market for oil will move along the demand curve. According to law of demand as quantity falls price rises. The war will increase the price of oil.
b) The Alaskan oil pipeline was completed. = The pipeline will make it more convenient to transport the oil. This will decrease the cost of oil supply. The producer will supply more oil at old prices. the supply will rise. The market for oil will move along the demand curve. According to law of demand as quantity rises price falls. The pipeline will decrease the price of oil.
c) The ceiling on the price of oil was removed. = The ceiling in price is regulation to fix the price below market equilibrium. The removal of ceilling will cause the price to adjust to its equilibrium value. The price will rise. The removal of ceiling will increase the oil prices.
d) Oil was discovered in the North Sea. = Discovery of new oil will increase the oil supply. The market for oil will move along the demand curve. According to law of demand as quantity rises price falls. The discovery of new oil will decrease the price of
Please read chapters 3&4 and answer the following questions:
Chapter 3 Questions
1-) (Tax Rates) Suppose taxes are related to income level as follows: Income Tax $1,000 $200 $2,000 $350 $3,000 $450
a. What percent of income is paid in taxes at each level? The person with $1,000 income will pay 20% in taxes (200/1000). The person with $2,000 income will pay 17.5% in taxes. (350/2000) The person with $3,000 income will pay 15% in taxes. (450/3000)
b. Is the tax rate progressive, proportional, or regressive?
The tax rate is regressive because the tax rate decreases as income increases.
2-) What are the major …show more content…
a) A major war began in the oil-rich Middle East. = The market for oil will move along the demand curve. According to law of demand as quantity falls price rises. The war will increase the price of oil.
b) The Alaskan oil pipeline was completed. = The pipeline will make it more convenient to transport the oil. This will decrease the cost of oil supply. The producer will supply more oil at old prices. the supply will rise. The market for oil will move along the demand curve. According to law of demand as quantity rises price falls. The pipeline will decrease the price of oil.
c) The ceiling on the price of oil was removed. = The ceiling in price is regulation to fix the price below market equilibrium. The removal of ceilling will cause the price to adjust to its equilibrium value. The price will rise. The removal of ceiling will increase the oil prices.
d) Oil was discovered in the North Sea. = Discovery of new oil will increase the oil supply. The market for oil will move along the demand curve. According to law of demand as quantity rises price falls. The discovery of new oil will decrease the price of