Laffer Curve: Shows the relationship between tax rates and tax revenue collected by governments. As taxes increase, tax revenue collected by the government also increases. It also shows that tax rates increasing after a certain point (T*) would cause people not to work as hard or not at all, thereby reducing tax revenue. Eventually, if tax rates reached 100%, then all people would choose not to work because everything they earned would go to the government. Point T* is the optimal tax rate.