Figure 8-23.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax.
-Refer to Figure 8-23.The curve that is shown on the figure is called the
A)deadweight-loss curve.
B)tax-incidence curve.
C)Laffer curve.
D)Lorenz curve.

Question

Figure 8-23.The figure represents the relationship between the size of a tax and the tax revenue raised by that tax. 
-Refer to Figure 8-23.The curve that is shown on the figure is called the
A)deadweight-loss curve. 
B)tax-incidence curve. 
C)Laffer curve. 
D)Lorenz curve.

Quizplus · Accepted Answer

The curve shown in the figure is called the Laffer Curve, which shows the relationship between the tax rate and tax revenue. The curve illustrates the concept that at some point, increasing the tax rate further will discourage economic activity and reduce taxable income, resulting in a decrease in tax revenue. The curve is named after economist Arthur Laffer, who popularized this concept.