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Refer to the Figure Below

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Refer to the figure below. The marginal cost of underreporting can be written as MC = X2 + 0.4.
Refer to the figure below. The marginal cost of underreporting can be written as MC = X2 + 0.4. (A)What is the maximum marginal tax level (t)possible that will ensure tax evasion is zero? (B)If the marginal tax rate is equal to 0.56, how much income will be evaded? (A)What is the maximum marginal tax level (t)possible that will ensure tax evasion is zero?
(B)If the marginal tax rate is equal to 0.56, how much income will be evaded?

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(A)t* < 0.40.
(B)Set...

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