2. (Similar to Chapter 12, 38A) The nominal GDP in the country of Adra is currently $650 million. Production in Adra is unaffected by changes in tax rates until the rate hits 30%. At the rate of 30% and for every 5% increase in the tax rate, the GDP drops by $32 million. a) Complete the following table: TABLE 1 (completed) % Tax Rate GDP Tax Revenue $650 5 10 15 20 25 30 35 40 45 50 55 60 65 70 b) At what percentage tax rate will the tax revenue be maximized c) What will be that tax revenue (in millions)

2. (Similar to Chapter 12, 38A) The nominal GDP in the country of Adra is currently $650 million. Production in Adra is unaffected by changes in tax rates until the rate hits 30%. At the rate of 30% and for every 5% increase in the tax rate, the GDP drops by $32 million. a) Complete the following table: TABLE 1 (completed) % Tax Rate GDP Tax Revenue $650 5 10 15 20 25 30 35 40 45 50 55 60 65 70 b) At what percentage tax rate will the tax revenue be maximized c) What will be that tax revenue (in millions)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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