Answer to Question #195616 in Calculus for Emmanuella

Question

The supply and demand equations of a good are respectively given by and 

The government decides to impose a tax, t, per unit. Find the value of t (in Ghana cedis) which maximizes the governments total tax revenue on the assumption that equilibrium conditions prevail in the market.

Answer 1

The total tax revenue that is maximized when marginal tax revenue equals zero .

Here we are talking about the tax revenue a d which is maximized - there is no specefic explanation but we can say that it is maximized when marginal tax revenue is becomes zero.

This study is for Ghana cedis.