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These flashcards cover key concepts regarding taxes and subsidies, market efficiency, elasticity, and tax burdens, based on lecture notes from an introductory microeconomics course.
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Taxes
Mandatory financial charges imposed by governments to fund public goods and services.
Subsidies
Financial assistance provided by the government to encourage certain behaviors or reduce the cost of goods.
Market Efficiency
The condition under which all resources are allocated in a way that maximizes total surplus.
Pareto Efficiency
A situation where no individual can be made better off without making someone else worse off.
Deadweight Loss
The loss of economic efficiency that occurs when the equilibrium outcome is not achievable or not achieved.
Price Elasticity of Demand
A measure of how much the quantity demanded of a good responds to a change in the price of that good.
Perfectly Inelastic
A situation where the quantity demanded remains constant regardless of price changes.
Perfectly Elastic
A situation where the quantity demanded responds infinitely to any change in price.
Statutory Incidence
The legal assignment of a tax to a particular party.
Tax Incidence
The actual distribution of the tax burden between consumers and producers.
Regressive Tax
A tax where the percentage of income paid in taxes decreases as income increases.
Progressive Tax
A tax where the percentage of income paid in taxes increases as income increases.