REVISION 5: EQUITY AND EQUALITY

FINAL EXAMINATION MAY 2019

AFY – 2018 JULY, AUGUST & OCTOBER INTAKES

QUESTION FIVE: EQUITY AND EQUALITY

A. Tim’s annual salary is $84,565. Explain how the salary and the
disposable income for the year will be very much different. You should
use figures to support your answer if possible.

(2 marks)

A. Differentiate between Marginal Tax Rate (MTR) and Average Tax Rate
(ATR). Use your answer from (A) above to support your answer.

(2 marks)

Income Tax Rates - 2018

Using the tax rate given above and an income of $84,565 calculate:

(i) Total tax payable $_________________

(ii) Average tax rate___________________

(iii) Marginal tax rate___________________

(3 marks)
FINAL EXAMINATION MAY 2016
AFY – 2015 JULY, AUGUST & OCTOBER INTAKES

QUESTION THREE: EQUITY AND EFFICIENCY 8 Marks

(a) Explain using an example why most people will consider it fair (equitable)
that someone is paid a much higher income than another.

(2marks)

(b) Using the current tax table given below, calculate the disposable income if
income is $46,000 and $120,000 per annum.

Table 2: NZ Income Tax Rates 2016

$46,000 $120,000

(4 marks)

ECONOMICS REVISION 5 FOR FINAL EXAMS 2020 JULY AUGUST OCTOBER

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(c) Graph 3: Lorenz Curve

% total Income

% total households

(i) On the graph above show the impact of increase of tax on income
over $70,000 from 33% to 35 % by the government. Label the new
curve L1.
(1 mark)

(ii) With reference to the graph above, explain how the change will
affect the a country’s income distribution

(1 mark)

ECONOMICS REVISION 5 FOR FINAL EXAMS 2020 JULY AUGUST OCTOBER

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FINAL EXAMINATION MAY 2015
TAFY – 2014 JULY/AUGUST/OCTOBER INTAKE

QUESTION TWO: EQUITY AND EFFICIENCY 8 Marks

A. Explain why most people will consider it fair (equitable) that a lawyer is
paid a much higher income than a cashier at a supermarket.

(2 marks)

B. One person earns $100,000 a year and the other is unemployed.

Explain two reasons why there may be more equality between them
than obvious.

(2 marks)

C. Using the current tax table given below, calculate the disposable
income of a person earning $120,000 per annum.

Table 1: NZ Income Tax Rates 2014

ECONOMICS REVISION 5 FOR FINAL EXAMS 2020 JULY AUGUST OCTOBER

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Additional Question
Use production possibility curve to explain equity and efficiency.

ECONOMICS REVISION 5 FOR FINAL EXAMS 2020 JULY AUGUST OCTOBER

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