Suppose a certain country has a flatrate tax system where ev

Suppose a certain country has a flat-rate tax system, where everyone is taxed the same percentage regardless of income. In addition, suppose everyone is forced to pay an additional $1000 per year. Let T be taxes, and X be income. Then, the equation relating T and X is:

Assume that the population average income is $35,000 with standard deviation $10,000.

(a) Find the mean of T.
(b) Find the standard deviation of T.
(c) If there are 1,000,000 people in the country, find the total tax revenue.

Solution

1. mean of T = 1000+0.3*35000 = $ 11500

2. standard deviation 0f T = 0.3*10000 = $ 3000

3. total revenue = 1000000*11500 = $ 11,500,000,000