Use the figure below to answer the following question(s).
Figure 4-10
-Refer to Figure 4-11. On the Laffer curve shown, tax revenue could be increased by
A) decreasing the marginal tax rates if we were currently at point A.
B) decreasing the marginal tax rates if we were currently at point C.
C) increasing the marginal tax rates if we were currently at point B.
D) increasing the marginal tax rates if we were currently at point C.

Question

Use the figure below to answer the following question(s).
Figure 4-10 
-Refer to Figure 4-11. On the Laffer curve shown, tax revenue could be increased by
A) decreasing the marginal tax rates if we were currently at point A. 
B) decreasing the marginal tax rates if we were currently at point C. 
C) increasing the marginal tax rates if we were currently at point B. 
D) increasing the marginal tax rates if we were currently at point C.

Quizplus · Accepted Answer

If we are at point C on the Laffer curve, it means we are on the downward-sloping side of the curve, where high tax rates are reducing total tax revenue. Decreasing the marginal tax rates would move us towards the peak of the curve, increasing tax revenue.

Use the Figure Below to Answer the Following Question(s)