((Microeconomics)
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The point where MSB = MSC indicates that there is an optimal level of production
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<<Negative Externalities: NES<< | <<Positive Externalities: PED<< |
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N - Negative | P - Positive |
E - Externality | E - Externality |
S - Supply (two supply curves, labeled MPC and MSC) | D - Demand (two demand curves, MPB, MSB) |
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There is no doubt that most (if not all) economies experience inequality in income distribution. There are many reasons for this inequality, some of which include:
This graph conveys the total income earned by the number of households. The line of perfect equality in the economy is 45 degrees, as indicated. However, the inequality is conveyed by a banana shaped curve.
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Taxation is a form of government intervention which is set by the government to reduce income inequality. Some taxes tend to improve inequality, while others make it worse. Here are the types of tax:
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Every certain amount of money earned as income must be taxed. Depending on the income, higher income levels are taxed at higher rates. Progressive tax is able to decrease inequality.
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^^Proportional Tax^^: applies the same tax on everyone regardless of their income. the same percentage total income in tax will be paid by all individuals.
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^^Regressive Tax:^^ the average tax burden decreases as percent of income rises.
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