-In the above figure, tax revenue is at a maximum when the tax rate is

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Quizplus · Accepted Answer

The concept of maximizing tax revenue is best explained by the Laffer Curve, which illustrates the relationship between tax rates and the amount of tax revenue collected by governments. The curve suggests that there is an optimal tax rate that maximizes revenue without discouraging productivity or investment. A 100% tax rate would discourage people from working, as they would not keep any of their earnings, leading to a decrease in overall tax revenue. Similarly, a 0% tax rate would collect no revenue. Therefore, neither extreme is effective for maximizing tax revenue. Without seeing the specific figure mentioned, a 30% tax rate is often considered a more moderate and potentially optimal rate, aligning with the principle that there is a peak rate that maximizes revenue without overly discouraging economic activity.

-In the Above Figure, Tax Revenue Is at a Maximum