As regards your example for making a product, you are right, there is a maximum revenue to be made, the trick is to find where that maximum is (inflection point of model). But regarding goverment tax revenues versus the rate, please see Pose #601. This Laffer curve makes the same assumptions you do about your widgets 1) at 0% tax rate you will recieve 0% revenue and 2) at 100% tax rate, you will receive no revenue, therefore based on perfectly well known mathematical principals there must be a maximum and minimum within the boundaries you have assumed.
This works for product and production mostly as there are fewer variables. You have cost of production to include overhead, wages etc. and then you have what you must sell the item for to make a profit. 2 variables. That is all well and good and jives with reality for the most part.
The difference in the Laffer curve, as I understand it, applied to government tax revenue is that there are numerous sources of tax revenue all at different rates, and are not necessarily all derived from sources or equal value (investments, versus worker production, versus savings, etc). Therefore if you read Post #601, you will see the problems associtated with this model and why it is not a good model to base government level financial policies off of (particularly supply side economics). The article attached to Post #601 makes some excellent points though it is slanted against the conservative view. Nonetheless, the points made are well supported from what I can see. The republicans in this country have used this flawed model since as early as Regan's term to support his trickle down policy.
Based on Laffer's assumptions, there may not be only 1 max or min in the curve and it has been shown to not approach 0%revenue at 100% tax rate either in some cases as well. The model is significantly flawed on this level and should by no means be used to form government level financial decisions IMO, but I am not a financial guy and am looking at this purely from a modeling/mathematical aspect. TIFWIW.