Question

The concept of marginal taxation is best exemplified by which one of the following? 1 Johnson's Retreat paid only $45,000 on total revenue of $570,000 last year. 2) Burlington Centre paid no taxes last year due to carryforward losses. 3) The Blue Moon paid $2.20 in taxes for every $10 of revenue last year. 4) Kirby's paid $120,000 in taxes while its primary competitor paid only $80,000 in taxes. 5) Mitchell's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.

Answer 1

The concept of marginal taxation is best exemplified by option 5) Mitchell's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.

Step-by-step explanation:

The concept of marginal taxation is best exemplified by option 5) Mitchell's Grocer increased its sales by $52,000 last year and had to pay an additional $16,000 in taxes.

Marginal taxation refers to the tax rate paid on additional income, often referred to as the marginal tax rate. In option 5), Mitchell's Grocer experienced an increase in sales and as a result, they had to pay an additional $16,000 in taxes. This demonstrates the application of marginal taxation where the increase in income leads to a higher tax liability.