Suppose there is a linear relationship between national income and total tax revenue.If national income is $100 million,then $25 million is collected as tax revenue .If national income is $200 million,then $40 million is collected in tax revenue.What is the marginal response in tax revenue to a change in national income?
A)15 million
B)0.15 million
C)15
D)0.15
E)-15

Question

Quizplus · Accepted Answer

The marginal response in tax revenue to a change in national income is calculated as the change in tax revenue divided by the change in national income. From $100 million to $200 million, national income increases by $100 million, and tax revenue increases from $25 million to $40 million, a change of $15 million. Therefore, the marginal response is $15 million / $100 million = 0.15.

Suppose There Is a Linear Relationship Between National Income and Total