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The laffer curve shows that there is a level of taxation at which government revenue is maximised. It assumes that government revenue will be zero if tax rate is 100% since nobody would work and assumes that if tax rate was zero then government would receive no revenue. As such it is logical to assume that there must be a tax rate between 0 and 100 which would maximise government revenue
The Laffer curve is a graph in economics that shows the relationship between the federal tax rate, and total government revenue. If the y-axis is government revenue, and the x-axis is tax rate, the graph appears to be an upside down parabola; however, if the x-axis is govt. tax revenue, and the y-axis is tax rate, the graph is a sideways, parabolic non-function. Either way, at a tax rate of 100%, there is $0 in revenue, and at a tax rate of 0%, there is also $0 in revenue. It illustrates that at a certain tax rate, govt. revenue is maximized.
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Who originated the theory that advocates in a recession the people spend and the government lower taxes?
Arthur Laffer allegedly scribbled the idea for his now famous "Laffer Curve" allegedly showing a an inverse and direct relationship between income tax rates and taxable income. The now discredited theory held that lowering effective income tax rates actually led to an increase in taxable income.
What is indeference curve?
Indifference curve is a curve. A curve that is being intersected with the budget line. In order to show the maximum satisfaction. Dave Ono:
How do you show on a demand curve an increase in the demand for a good?
You can choose to shift the demand curve to the right i.e. expansion of demand.
How does production possibilities curve differ from production possibilities frontier?
the possibility production curve show production that can be produces using minimum resources whereas the possibilty productive frointer show the attainable levls of production.
What is a demand and supply curve?
A demand and supply curve is used in economic to show that in a competitive market, the price of a product will vary depending on the need of the consumers.
