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Re: The town of Zenith has a population of 50,000. The average income of a [#permalink]
Hello chetan2u.. i have few doubts .. can you please clarify ?

Why tax is not linear function ? As percentage of tax will be dependent on income... also for III there will be people below 3700 who will lower the atleast value since 3700 is only the average ?


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Re: The town of Zenith has a population of 50,000. The average income of a [#permalink]
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Bunuel wrote:

The town of Zenith has a population of 50,000. The average income of a person who lives in Zenith is $3,700 per year. Which of the following statements can be inferred from the table and the information about Zenith given above?

I. Every person in Zenith paid $37 in tax.
II. Tax is a linear function of income.
III. The total amount of taxes paid by the people of Zenith was at least $1,850,000.

(A) I only
(B) II only
(C) III only
(D) I and III only
(E) I, II, and III


Let’s analyze each Roman numeral.

I. Every person in Zenith paid $37 in tax.

This might not be true since the average income of $3,700 does not mean everyone earns that amount. Some might earn that amount, some might earn more, and some might earn less. If someone earns an amount other than $3,700, his or her income tax would not be $37.

II. Tax is a linear function of income.

This is not true, either, since the percentages for the income tax brackets are not the same. When graphed, each income bracket is linear since its percentage number is the slope of the line. However, since each income bracket has a different percentage, the whole graph is piecewise linear, but not one straight line when all the income brackets are put together.

III. The total amount of taxes paid by the people of Zenith was at least $1,850,000.

This is true because if everyone earns $3,700, then each person will pay $37 in income tax. Since there are 50,000 people, the total income taxes paid will be 50,000 x $37 = $1,850,000. Of course, as mentioned in Roman numeral I, some might earn more than $3,700 and some might earn less. If someone earns less than $3,700, he or she still pays 1% of his or her income tax. However, anyone who earns more than $4,000, say $5,000, will be paying an income tax of more than 1%. In other words, the total income taxes paid will only increase when there are people earning an income in higher brackets. Thus, the total income taxes paid by all residents are at least $1,850,000.

Answer: C
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Re: The town of Zenith has a population of 50,000. The average income of a [#permalink]
I felt it was like a CR + DS question :) Admittedly it took a while:

The town of Zenith has a population of 50,000. The average income of a person who lives in Zenith is $3,700 per year. Which of the following statements can be inferred from the table and the information about Zenith given above?

I. Every person in Zenith paid $37 in tax.
II. Tax is a linear function of income.
III. The total amount of taxes paid by the people of Zenith was at least $1,850,000.

(A) I only
(B) II only
(C) III only
(D) I and III only
(E) I, II, and III

1) 37$ in tax. This the 'at least amount' basis $3700 avg income. But this doesn't apply to the higher slabs (they pay more tax). So NS

2) II--> no it is not linear. Evident. There is not much of a pattern among the taxation slabs

3) III --> YES. ppl in the 25000 bracket paid at least 1070 + 1820 in tax (say if income was 26000). That into 50,000 ppl is 144500000 --> so even if the 50K people were evenly distributed they would have paid 1850000 easily.

so III only.
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Re: The town of Zenith has a population of 50,000. The average income of a [#permalink]
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Re: The town of Zenith has a population of 50,000. The average income of a [#permalink]
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