Solved: Cigar Company Profits The daily profits of a cigar

Chapter , Problem 3.5.91

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Cigar Company Profits The daily profits of a cigar company from selling x cigars are given by p(x) = -0.05x2 + 100x - 2000 The government wishes to impose a tax on cigars (sometimescalled a sin tax) that gives the company the option of eitherpaying a flat tax of $10,000 per day or a tax of 10% on profits.As chief financial officer (CFO) of the company, you need todecide which tax is the better option for the company. (a) On the same screen, graph Y1 = p(x) - 10,000 andYz = (1 - 0.10)p(x).(b) Based on the graph, which option would you select?Why?( c) Using the terminology learned in this section, describeeach graph in terms of the graph of p(x).(d) Suppose that the government offered the options of aflat tax of $4800 or a tax of 10% on profits. Which wouldyou select? Why?