In a simple income tax system, income below $10 000 is untaxed. For income above $10 000, a tax rate of 30% is charged on all extra income. Which statement is correct for people who earn more than $10 000?
- Aaverage rate of tax: increases as incomes increase; marginal rate of tax: increases as incomes increase
- Baverage rate of tax: increases as incomes increase; marginal rate of tax: remains constant as incomes increase
- Caverage rate of tax: remains constant as incomes increase; marginal rate of tax: increases as incomes increase
- Daverage rate of tax: remains constant as incomes increase; marginal rate of tax: remains constant as incomes increase