A Government Wishing to Maximize Its Tax Revenues Should

question 107

Multiple Choice

A government wishing to maximize its tax revenues should

• A) always assess the highest possible tax rate.
• B) always assess the lowest possible tax rate.
• C) determine the highest possible tax rate and then back it down by exactly 4 percentage points.
• D) push tax rates up to the point where revenues peak, but raise the tax rate no farther.

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