To increase revenues during recent recession, governor of the state proposed the given taxation formula:
T(i) = 0.001i0.5,
where i signifies total annual income earned by the individual in dollars and
T(i) is income tax rate as the fraction of total annual income. (Thus, for instance, the income of $50,000 per year would be taxed at about 22%, while the income of double that amount would be taxed at about 32%.)
(a) Compute after-tax (net) income
N(i) individual can expect to earn as the function of income i.
(b) Compute individual's marginal after-tax income at income levels of $100,000 and $700,000.
(c) At what income individual's marginal after-tax income becomes negative?
Find after-tax income at that level?
What occurs at higher income levels?
At any income level above ________ , individual begins to pay back more than $1 for every additional $1 earned, so his or her net income begins to drop.
(d) Find most anyone can earn after taxes?