Question: Problem # 5 6 : Laffer Equation During the 1 9 8 0 s , the controversial economist Arthur Laffer promoted the idea that tax
Problem #: Laffer Equation
During the s the controversial economist Arthur Laffer promoted the idea that tax increases lead to a reduction in government revenue. Called supplyside economics, the theory uses functions such as
This function models the government tax revenue, in tens of billions of dollars, in terms of the tax rate, The graph of the function is shown. It illustrates tax revenue decreasing quite dramatically as the tax rate increases. At a tax rate of gasp the government takes all of our money and no one has an incentive to work. With no income earned, zero dollars in tax revenue is generated.
Use function f and its graph to solve.
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