Answer to Question #242026 in Microeconomics for sophia

Question

Suppose the relationship between the​ government's tax revenue​ (T) and national income​ (Y) is represented by the equation T=35+0.5Y. Plot this relationship on a scale​ diagram, with Y on the horizontal axis and T on the vertical axis. Interpret the equation.

The slope of the equation is ...?

​, which means that for every one additional dollar in national​ income, the​ government's tax revenue ▼increases or decreases?

 

by .....?

.

Answer 1

Suppose the relationship between the​ government's tax revenue​(T) and national income​ (Y) is represented by the equation T=35+0.5Y. We measure ,Y on the horizontal axis and T on the vertical axis.

The slope of the equation is ...

T = 35 + 0.5Y

dT/dY = 0.5

​, which means that for every one additional dollar in national​income, the​ government's tax revenue ▼increases by less amount

Because as national income increases, tax revenue remains unaffected or increases by less amount