Web-Based Questions


1			BUREAUCRACY AND INEFFICIENCY—THE POST OFFICE VERSUS UPS Some economists contend that public agencies generally are less efficient than private businesses. United Parcel Service (UPS) competes directly with the U.S. Postal Service for express mail and packages. Assume you need to send an express letter and a 3-pound package from your address to either New York City or Los Angeles. On the basis of their interactive rate and options calculators at http://www.ups.com and http://www.usps.com, which service is more competitive as to price and delivery? Does a lower rate with greater delivery options mean greater efficiency? Why or why not?




2			CALCULATING TAXES AND DETERMINING AVERAGE RATES The Internal Revenue Service provides current tax-rate tables online at http://www.irs.gov. Enter "Tax Tables" in the search line for forms and publications and find "1040 Instructions (Tax Tables)" for the latest tax year. Find the tax payment you would owe if you were a single taxpayer with a taxable income of (1) $23,360, (2) $46,200, and (3) $85,010 in the taxable year. Compare the average tax rates (taxable income/tax payment) for the three levels of income. Next, suppose that you live in a state with a 7 percent sales tax and that you spent 90 percent of your taxable income in the year. How much total sales tax would you pay at each income level? Add the total sales tax to the income tax for each income level and compute new average tax rates based on the combined income tax and sales tax as a percentage of taxable income. Compare the new percentages with the previous ones. What can you conclude from the comparison? (We are assuming that you take the standard deduction on your Federal income tax form and thus do not claim a sales tax deduction.)

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