Chapter 1: Introduction

This set of flashcards covers key vocabulary and concepts from the lecture notes on capitalism, taxation, and market systems.

Capitalism

An economic system where private individuals own and control property and businesses, leading to prosperity.

Market Price System

A mechanism that uses prices determined by supply and demand to allocate resources and guide consumer and producer decisions.

Bread Poem

A poem by Russ Roberts that illustrates the function of a market economy in providing goods like bread without central planning.

Income Tax

A tax levied by governments on individuals or entities based on their income or profits.

Progressive Tax

A tax system where the tax rate increases as the taxable amount increases.

Proportional Tax

A tax system where the tax rate remains constant regardless of income levels, also known as a flat tax.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases.

Invisible Hand

A term used to describe the self-regulating nature of the marketplace where individual self-interest leads to positive social outcomes.

Consumer Behavior

The study of how individuals decide to spend their available resources, influenced by market prices.

Supply and Demand

An economic model that describes the relationship between the quantity of a commodity available and the desire for that commodity in the market.