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The Laffer Curve indicates that when tax rates are high, a rate reduction may lead to an increase in tax revenue. when tax rates are low, an increase in tax rates will generally lead to a reduction in tax revenues. an increase in tax rates will always lead to an increase in tax revenues. the deadweight losses resulting from taxation are small at the tax rate that maximizes the revenues derived by the government.

The Laffer Curve indicates that when tax rates are high, a rate reduction may lead to an increase in tax revenue. when tax rates are low, an increase in tax rates will generally lead to a reduction in tax revenues. an increase in tax rates will always lead to an increase in tax revenues. the deadweight losses resulting from taxation are small at the tax rate that maximizes the revenues derived by the government.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The Laffer Curve indicates that when tax rates are high, a rate reduction may lead to an increase in tax revenue. when tax rates are low, an increase in tax rates will generally lead to a reduction in tax revenues. an increase in tax rates will always lead to an increase in tax revenues. the deadweight losses resulting from taxation are small at the tax rate that maximizes the revenues derived by the government.
Transcribed Image Text:The Laffer Curve indicates that when tax rates are high, a rate reduction may lead to an increase in tax revenue. when tax rates are low, an increase in tax rates will generally lead to a reduction in tax revenues. an increase in tax rates will always lead to an increase in tax revenues. the deadweight losses resulting from taxation are small at the tax rate that maximizes the revenues derived by the government.
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