Economist Arthur Laffer has been a center of controversy because of his Laffer curve, an idealized version of which is shown here.

According to this curve, increasing a tax rate, say from x₁ percent to x₂ percent on the graph, can actually lead to a decrease in government revenue. All economists agree on the endpoints, 0 revenue at tax rates of both 0% and 100%, but there is much disagreement on the location of the rate x₁ that produces maximum revenue. Suppose an economist studying the Laffer curve produces the rational function

where R(x) is government revenue in tens of millions of dollars for a tax rate of x percent, with the function valid for 55 ≤ x ≤ 100. Find the revenue for the following tax rates. Round to the nearest tenth if necessary.

(a) 55%

(b) 60% 

(c) 70% 

(d) 90% 

(e) 100%

Transcribed Image Text:

y A Maximum revenue + х 100 X2 Tax rate percent 80x – 8000 R(x) = x – 110