Question 19M.3.HL.TZ0.3e.ii
| Date | May 2019 | Marks available | [Maximum mark: 2] | Reference code | 19M.3.HL.TZ0.3e.ii |
| Level | HL | Paper | 3 | Time zone | TZ0 |
| Command term | Calculate | Question number | e.ii | Adapted from | N/A |
Table 1 provides information about Fairland.
Table 1
Figure 6 illustrates Fairland’s demand (D) for and supply (S) of low-wage labour.
Figure 6
In order to raise the living standards of low-wage workers, the government of Fairland has decided to impose a minimum wage of $10 per hour.
The marginal rates of income tax in Fairland are given in Table 2.
Table 2
Fred is a low-wage worker in Fairland. As a result of the minimum wage his income will increase from $15 000 per year to $19 000 per year.
Calculate how much additional income tax Fred will need to pay.
[2]
3000 × 10 % + 1000 × 20 %
Any valid working is sufficient for [1].
= $500
An answer of $500 or 500 without any working is sufficient for [1].
OR
Initial tax paid = 10 000 × 5 % + 5000 × 10 % = 1000
New tax paid = 10 000 × 5 % + 8000 × 10 % + 1000 × 20 % = 1500
Any valid working is sufficient for [1].
Change in tax paid = 1500 − 1000
= $500
An answer of $500 or 500 without any working is sufficient for [1].
NB Responses which apply the bands such that, for example, 10% is charged on $7 999 rather than $8 000 may be fully rewarded.
Although there were many accurate responses, a large number of candidates applied a single “rate of income tax” to each salary, resulting in an answer of $3800 − $1500 = $2300.
