Econ Ch 4
Order by
19 terms
Terms | Definitions |
|---|---|
 Resource Market | The market for inputs used to produce goods and services |
| Price Controls | Governemt-mandated prices that are generally imposed in the form of maximum or minimum legal prices |
| Price Ceiling | A legally established maximum price sellers can charge for a good or resource |
| Shortage | A condition in which the mount of good offered for sale by producers is less than the amount demanded by buyers at the existing price. An increase in price would eliminate the shortage |
| Price Floor | A legally established minimum price buyers must pay for a good or service |
| Surplus | A condition in which the amount of a good offered for sale by producers is greater than the amount that buyers will purchase at the existing price. A decline in price would eliminate the surplus |
| Minimum Wage | Legislation requiring that worker be paid at least the stated minimum hourly rate of pay |
| Black Market | A market that operates outside the legal system in which either illegal goods are sold or legal goods are sold at illegal prices or terms |
| Tax Incidence | The way the burden of a tax is distributed among economic units(consumers, producers, etc). The actual tax burden does not always fall on those who are statutorily assigned to pay the tax |
| Tax Base | The level or quantity of an economic activity that is taxed. Higher ta rates reduce the level of the tax base because they make the activity less attractive |
| Tax Rate | The per-unit amount of tax or the percentage rate at which the economic activity is taxed |
| Deadweight Loss | The loss of gains from trade to buyers and sellers that occurs when a tax is imposed. The deadweight loss imposes a burden on both buyers and sellers over and above the actual payment of the tax |
| Average Tax Rate(ATR) | Tax liability divided by taxable income. It is the percentage of income paid in taxes. |
| Progressive Tax | A tax in which the average tax rate rises with income. People with higher incomes will pay a higher percentage of their income in taxes. |
| Proportional tax | A tax in which the average tax rate is the same at all income levels. Everyone pays the same percentage of income in taxes. |
| Regressive tax | A tax in which the average tax rte falls with income. People with higher incomes will pay a lower percentage of their income in taxes. |
| Marginal Tax Rate(MTR) | The additional tax liability a person faces divided by his or her additional taxable income. It is the percentage of an extra dollar of income earned that must be paid in taxes. It is the marginal tax rate that is relevant in personal decision making. |
| Laffer Curve | A curve illustrating the relationship between the tax rate and tax revenues. Tax revenues will be low at both very high and very low tax rates. When tax rate are quite high, lowering them can increase tax revenue. |
| Subsidy | A payment the government makes to either the buyer or seller, usually on per-unity basis, when a good or service is purchased or sold. |
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