The figure given below depicts the tax revenue for different tax rates applied by the government.?Figure 11.2

-Refer to Figure 11.2. If the tax rate were 100 percent, then:
A) tax revenue would be maximized.
B) no one would be willing to work.
C) there would be a strong incentive to work.
D) tax revenue would be greater than if the tax rate were 70 percent.
E) tax revenue would be less than if the tax rate were zero percent.

Question

The figure given below depicts the tax revenue for different tax rates applied by the government.?Figure 11.2
 
-Refer to Figure 11.2. If the tax rate were 100 percent, then:
A) tax revenue would be maximized. 
B) no one would be willing to work. 
C) there would be a strong incentive to work. 
D) tax revenue would be greater than if the tax rate were 70 percent. 
E) tax revenue would be less than if the tax rate were zero percent.

Quizplus · Accepted Answer

If the tax rate were 100 percent, people would not be willing to work as they would not get to keep any of the money they earned. Therefore, tax revenue would be zero, not maximized as option A suggests.

The Figure Given Below Depicts the Tax Revenue for Different