-Refer to Exhibit 11-2.At the highest point above the horizontal axis,tax revenues
A) are maximized.
B) are lower than at A and higher than at B.
C) are lower than at B and higher than at A.
D) drop to zero.

Question

-Refer to Exhibit 11-2.At the highest point above the horizontal axis,tax revenues
A) are maximized. 
B) are lower than at A and higher than at B. 
C) are lower than at B and higher than at A. 
D) drop to zero.

Quizplus · Accepted Answer

At the highest point above the horizontal axis in a typical Laffer Curve, tax revenues are maximized. This point represents the optimal tax rate where government revenue is at its peak before decreasing due to disincentives to work or invest.