Government tax revenue $R$ (in naira) depends on the tax rate $t$ (as a decimal) according to the Laffer‑curve model $R = A\,t\,(1-t)$, where $A = \text{₦}500{,}000{,}000$. Determine the tax rate that maximises revenue and compute the maximum revenue.

Question

Accepted Answer

Tax rate = 50% and maximum revenue = ₦125,000,000

Neco Model Questions Vol1 2020 Economics Question 3

Government tax revenue \(R\) (in naira) depends on the tax rate \(t\) (as a decimal) according to the Laffer‑curve model \(R = A\,t\,(1-t)\), where \(A = \text{₦}500{,}000{,}000\). Determine the tax rate that maximises revenue and compute the maximum revenue.

Answer Options

About This Question

Master the Exam!