Suppose that sharlene faces a marginal income tax rate of, Finance Basics

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Suppose that sharlene faces a marginal income tax rate of

Question: Suppose that Sharlene faces a marginal income tax rate of 35 percent, and if she cheats on her taxes, there is a 2 percent chance that she will be caught Suppose also that the marginal penalty of tax evasion is 10/, where I is the amount of unreported income (in thousands of dollars). How much income will Sharlene fail to report?

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Finance Basics: Suppose that sharlene faces a marginal income tax rate of

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Finance Basics: Suppose that sharlene faces a marginal income tax rate of

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