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Related Flashcards
Cards In This Set
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What is a patent?
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assigns property rights for 17 years, intellectual property apply to U.S. government, and can be renewed
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What is a corrective tax?
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Form of regulation; a tax
designed to induce private decision makers to take account of the social costs
that arise from a negative externality
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Consumer Surplus
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Amount consumer is willing to spend minus supplier’s price; the amount a buyer is willing to pay for a good minus the
amount the buyer actually pays for it
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Producer Surplus
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How much product sell minus how much supplier
paid the producer for it; the amount a seller is paid for a good minus the seller’s
cost of providing it
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Budget deficit
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Owe more money than we make; a shortfall
of tax revenue from government spending
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Budget Surplus
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Make more money than we owe; an excess of tax revenue over government spending; an excess of government receipts over government spending
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Trade Deficit
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Having more imports than exports; an excess of imports over exports
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Trade Surplus
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Having more exports than imports; an excess
of exports over imports
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Welfare Economics
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How the allocation of resources affects economic
well-being; the
study of how the allocation of resources affects economic well-being
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Comparative Advantage
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Ability to produce goods at a lower cost than
other producers; the ability to produce a good at a lower
opportunity cost than another producer
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Progressive tax
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- a tax
for which high-income taxpayers pay a larger fraction of their income than do
low-income taxpayers- Percentages go up as money goes up- Marginal- Incrementalo
For example, percentages go up §
20%,25%,30%- U.S. Tax system
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Taxable income is computed as
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Total income minus an amount based on the number of dependents (primarily children) and minus certain expenses that policymakers have deemed "deductible" (such as mortgage interest payments, state and local payments, and charitable giving).
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Tax liability is calculated:
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From taxable income
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If your income is $40,000 and your income tax liability is $5,000, your:
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Average tax rate is 12.5 percent
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Because the marginal tax rate rises as income rises,
higher income families, in general, pay ____.
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Higher income families, in general, pay a larger percentage of their income in taxes
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