We are given the following information: The daily profits of a cigar company from selling x cigars are given by: p(x) = -.05x^2 + 100x - 2000
The government wishes to impose a tax on cigars (sometimes called a sin tax) That gives the company the option of either paying a flat tax of $ 10,000 per day or a tax of 10% on profits. As chief financial officer of the company, one needs to decide which tax is the better option for the company.
a. Determine the profit function for each of the tax options.
Using the above equation I came up with these two:
(-.05x^2 + 100x -2000) - 1000 = -2005
(-.05x^2 + 100x -2000) - .10(-.05x^2+100x-2000) = -905
Am I on the right track with these?