Suppose the tax rate on the first $10,000 income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $30,000; and 40 percent on any income over $80,000. family a has income of $40,000 and family b has income of $100,000. what is the marginal and average tax rate for each family? a. family a.marginallong dash—10 percent; averagelong dash—10 percent; family b.marginallong dash—30 percent; averagelong dash—30 percent. b. family a.marginallong dash—20 percent; averagelong dash—20 percent; family b.marginallong dash—40 percent; averagelong dash—40 percent. c. family a.marginallong dash—20 percent; averagelong dash—10 percent; family b.marginallong dash—40 percent; averagelong dash—23 percent. d. family a.marginallong dash—20 percent; averagelong dash—15 percent; family b.marginallong dash—40 percent; averagelong dash—20 percent.

  Family A: marginal rate 20%, average rate 10% 

Family B: marginal rate 40%, average rate 23% 

The marginal tax rate is the rate paid on the last dollar of income; this would be whatever tax bracket the family is in. The average price is the total tax divided by the total revenue. 

Family A: 

total income $40,000: this includes $10,000 at 0%, $20,000 at 10% (tax of $2,000), and $10,000 at 20% (tax of $2,000). The last rate paid is 20% so that is the marginal rate; the total tax paid is $4,000, divide that by $40,000 total income, that is the average rate. 

Family B: 

total income $100,000: this includes $10,000 at 0%, $20,000 at 10% (tax of $2,000), $20,000 at 20% (tax of $4,000), $30,000 at 30% (tax of $9,000), and $20,000 at 40% (tax of $8,000). The last rate paid is 40% so that is the marginal rate; the total tax paid is $23,000, divide that by $100,000 total income, that is the average rate.

what the heck is going on?

Explanation: