IB Economics HL 3.4.10 Taxation calculations Question Bank

Practise IB Economics HL 3.4.10 by applying taxation calculations concepts to exam-style questions.

Exam points

identify the relevant model, concept or evidence
apply the correct subject framework to the question
evaluate the result using clear evidence and subject terminology

[Maximum number: 2]

The data in Table 2 refer to Kanyaland, a small, open, developing economy in 2019. All data are in billions of Kanyaland dollars (K$).

Table 2

Using Table 4, calculate the average tax rate for Sammy.

Tax paid by Sammy:
(0.22 x 20000) + (0.26 x 10000) + (0.30 x 8000) + (0.34 x 8000) = 12120.

Average tax rate = 12120 / 46000 x 100 = 26.35%.

OR

Average tax rate = 12120 / 46000 = 0.26.

Valid working, ie three of the four terms in parentheses correct, is sufficient for [1].

\begin{aligned}\text{Tax paid}&=(0.22\times20000)+(0.26\times10000)+(0.30\times8000)+(0.34\times8000)=12120\\\mathrm{ATR}&=\frac{12120}{46000}\times100=26.35\%\\\mathrm{ATR}&=\frac{12120}{46000}=0.26\end{aligned}

An answer of 26.35 or 0.26 without any valid working is sufficient for [1].

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3.4.10 (HL)—Taxation calculations question 1