Choose the One Alternative That Best Completes the Statement or Answers

question 245

Multiple Choice

Choose the one alternative that best completes the statement or answers the question.
-Economists use what is called a Leffer curve to predict the government revenue for tax rates from $0 \%$ to $100 \%$ . Economists agree that the end points of the curve generate 0 revenue, but disagree on the tax rate that produces $t$ maximum revenue. Suppose an economist produces this rational function
$R ( x ) = \frac { 10 x ( 100 - x ) } { 25 + x }$ , where $R$ is revenue in millions at a tax rate of $x$ percent. Use a graphing calculator to graph the function. What tax rate produces the maximum revenue? What is the maximum revenue?

• A) \(38.4 \% ; \$ 383\) million
• B) \(27.0 \% ; \$ 379\) million
• C) \(28.8 \% ; \$ 272\) million
• D) \(30.9 \%\); \(\$ 382\) million

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Definitions:

Aggregate Supply Curve

A graphical representation depicting the total supply of goods and services that firms in an economy are willing to sell at a given price level over a period of time.

Maximum Output Level

The highest amount of production that a company or economy can sustain over a long period without leading to deterioration.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the real value of goods and services produced.

Employment Level

Refers to the total number of people currently employed in the economy, indicative of its health and labor market status.