Question

5. In state A, the gas tax is 30 cents per gallon, where the average pre-tax cost of gas is $2.64 per gallon. In-state B, the gas tax is 26 cents per gallon, where the average pre-tax cost of gas is $3.36 per gallon. Which state has a lower gas tax rate?State AState B

Answer 1

state A

gas tax : 0.30 per gallon

pre tax cost : 2.64 per gallon

2.64 x = 0.30

x = 0.30/2.64

x= 0.1136 = 11.36 % (tax rate A )

State B

gas tax = 0.26 per gallon

pre tax cost = 3.36 per gallon

3.36 x = 0.26

x= 0.26/3.36

x= 0.077 = 7.74% (tax rate B)

State B has a lower tax rate