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MICRO EXAM 2 (13, 15)
Modules 13, 15
Terms in this set (17)
a market in which goods or services are bought and sold illegally, either because it is illegal to sell them at all or because the prices charged are legally prohibited by a price ceiling.
inefficient allocation of sales among sellers
a form of inefficiency in which sellers who would be willing to sell a good at the lowest price are not always those who actually manage to sell it; often the result of a price floor.
inefficient allocation to consumers
a form of inefficiency in which people who want a good badly and are willing to pay a high price don't get it, and those who care relatively little about the good and are only willing to pay a low price do get it; often a result of a price ceiling.
inefficiently high quality
a form of inefficiency in which sellers offer high-quality goods at a high price even though buyers would prefer a lower quality at a lower price; often the result of a price floor.
inefficiently low quality
a form of inefficiency in which sellers offer low-quality goods at a low price even though buyers would prefer a higher quality at a higher price; often a result of a price ceiling.
a legal floor on the wage rate. The wage rate is the market price of labor.
the maximum price sellers are allowed to charge for a good or service; a form of price control.
legal restrictions on how high or low a market price may go.
the minimum price buyers are required to pay for a good or service; a form of price control.
a form of inefficiency in which people expend money, effort, and time to cope with the shortages caused by a price ceiling.
administrative costs (of a tax)
the resources used (which is a cost) by government to collect the tax, and by taxpayers to pay it, over and above the amount of the tax, as well as to evade it.
a tax on sales of a particular good or service.
taxes that don't depend on the taxpayer's income.
a tax that takes a larger share of the income of high-income taxpayers than of low-income taxpayers.
a tax that is the same percentage of the tax base regardless of the taxpayer's income or wealth.
a tax that takes a smaller share of the income of high-income taxpayers than of low-income taxpayers.
the distribution of the tax burden.
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