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the United States. Taxes are deferred if the income is reinvested abroad.

The department seeks a tax rate that will maximize total tax revenue from

foreign earnings. Find the optimal tax rate if

a. B(t)  80 100t

b. B(t)  80 240t^2

c.

where B(t) is the foreign earnings of U.S. multinational companies

returned to the United States and t is the tax rate.

3. A firm’s total profit is given by 20x x^2 16y 2y^2.
   a. What values of x and y will maximize the firm’s profit?
   b. Repeat part (a) assuming the firm faces the constraint x y 8.
   c. Repeat part (a) assuming the constraint is x  .5y 7.5.

B(t) 80  801 t,

72 Appendix to Chapter 2 Calculus and Optimization Techniques

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