Foundations of Microeconomics - Taxation Concepts

These flashcards cover key vocabulary terms related to taxation and economic principles.

Tax Incidence

The division of the burden of a tax between the buyer and the seller.

Deadweight Loss

The loss of economic efficiency that occurs when equilibrium for a good or service is not achieved or is unachievable.

Marginal Benefit

The additional benefit received from consuming one more unit of a good or service.

Marginal Cost

The additional cost incurred from producing one more unit of a good or service.

Perfectly Inelastic Demand

Demand that does not change when the price changes; consumers will buy the same amount regardless of price.

Perfectly Elastic Demand

Demand that changes infinitely with any change in price; consumers will stop buying if the price increases.

Progressive Tax

A tax whose average rate increases as income increases.

Proportional Tax

A tax whose average rate remains the same regardless of income level.

Regressive Tax

A tax whose average rate decreases as income increases.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.