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Math Help - Economics Question - Maximizing Government Tax Revenues

  1. #1
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    Economics Question - Maximizing Government Tax Revenues

    Let's assume your demand function is Q(P) = 55 - P, and the supply function is P = 25. What is the excise tax that maximizes revenue for the government?

    Now let's assume that your supply function is Q(P) = 5 + 3P. What is the excise tax that maximizes revenue for the government?


    I tried to figure it out but it wasn't working for me


    Any help would be of great appreciation!
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  2. #2
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    Re: Economics Question - Maximizing Government Tax Revenues

    This problem cannot be solved alone by the data you are providing. By your description, we could tax the income of all citizens in its entirety, since output is not affected by taxes.
    How does the excise tax affect demand and supply?
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