Answer:
66.992%
Step-by-step explanation:
[tex]Sales, S(t)=7-6\sqrt[3]{t}[/tex]
Since we want to maximize revenue for the government
Government's Revenue= Sales X Tax Rate
[tex]R(t)=t \cdot S(t)\\R(t)=t(7-6\sqrt[3]{t})\\=7t-6t^{1+1/3}\\R(t)=7t-6t^{4/3}[/tex]
To maximize revenue, we differentiate R(t) and equate it to zero to solve for its critical points. Then we test that this critical point is a relative maximum for R(t) using the second derivative test.
Now:
[tex]R'(t)=7-6*\frac{4}{3} t^{4/3-1}\\=7-8t^{1/3}[/tex]
Setting the derivative equal to zero
[tex]7-8t^{1/3}=0\\7=8t^{1/3}\\t^{1/3}=\dfrac{7}{8} \\t=(\frac{7}{8})^3\\t=0.66992[/tex]
Next, we determine that t=0.6692 is a relative maximum for R(t) using the second derivative test.
[tex]R''(t)=-8*\frac{1}{3} t^{1/3-1}\\R''(t)=-\frac{8}{3} t^{-2/3}[/tex]
R''(0.6692)=-3.48 (which is negative)
Therefore, t=0.66992 is a relative maximum for R(t).
The tax rate, t that maximizes revenue for the government is:
=0.66992 X 100
t=66.992% (correct to 3 decimal places)
