Suppose that the tax (Ti) paid by individual i is the following function of his or her income (Xi…
Suppose that the tax (Ti) paid by individual i is the following function of his or her income (Xi):
Ti = 0.1(Xi – 2000) = 0.1Xi – 200
(i.e. there is a flat tax of 10% on all income over 2000). You know that total income in a geographical area containing 100 individuals is $5,000,000. Assuming that all 100 individuals have an income of at least $2,000, what is the total tax revenue?
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