If you would have to pay $5,000 in taxes on a $25,000 taxable income and $7,000 on a $30,000 taxable income, then the marginal tax rate on the additional $5,000 of income is ________.
1) 40 percent and the average tax rate is about 23 percent at the $30,000 income level.
2) 50 percent and the average tax rate is 40 percent at the $30,000 income level.
3) 40 percent and the average tax rate is 25 percent at the $25,000 income level.
4) 30 percent, but average tax rates cannot be determined from the information given.
