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Lecture 17

ECON 1000 Lecture 17: Week 9

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Department
Economics
Course
ECON 1000
Professor
Nick Rowe
Semester
Fall

Description
Econ 1000 - Week 9 – Lecture 17 In terms of tax and income as the axis on a graph:  If slope is 0 than so is the marginal tax rate  If slope is one, after every dollar you in you get to keep that extra dollar  Tax you pay generally doesn’t change when your income increases or decreases  Some benefits: If the marginal tax rate is one  When  Perfect equality: o Marginal benefit of consuming extra products gets smaller as you consume more o Diminishing marginal benefits of consumption is what this is known as o Utility: basic benefits of consumption as a equation it can be [u=u(c)] – utility is based on consumption o Marginal utility = change in utility / change in consumption o Utilitarianism: individuals maximize their own individual utility (economics definition)  Slope of U(C) o Slope = change in utility over / change in consumption [this is also the marginal utility] o The curve of this graph will be diminishing (outward flex)  In a utilitarian economy (everyone is equal) the benefits of consumption and the diminishing marginal benefits boosts
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