Page 10-34.docx

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Oct 1. 2010
Page 10-34
Revenue Taxes Taxes whose main purpose is to fund government services and programs
Progressive Revenue Taxes Taxes levied at a higher rate on higher-income taxpayers and at a lower
rate on lower-income taxpayers
Regressive Revenue Taxes Taxes that cause poorer people to pay a high percentage of income than
richer people say
Restrictive Taxes Taxes levied to control certain activities that legislators believe should be controlled
Demand The willingness and ability of buyers to purchase a product or services
Supply The willingness and ability of produces to offer a good or services for sale
Law of Demand The principle that buyers will purchase (demand) more of a product as price drops
Law of Supply - The principle that producers will offer (supply) more of a product as price rises
Demand and Supply Schedule Assessment of the relationship between different levels of demand and
supply at different price levels
Demand Curve Graph showing how many units of a product will be demanded (bought) at different
prices
Supply Curve Graph showing how many units of a product will be supplied (offered for sale) at
different prices
Market Price (Equilibrium) Profit-maximizing price at which the quantity of goods demanded and the
quantity of goods supplied is equal
Surplus Situation in which quantity supplied exceeds quantity demanded
Shortage Situation in which quantity demanded exceeds quantity supplied
Private Enterprise An economic system characterized by private property rights, freedom of choice,
profits, and competition
Competition - The vying among business in a particular market or industry to best satisfies consumer
demands and earns profits
Perfect Competition A market or industry characterized by a very large number of small firms
producing an identical product so that none of the firms has any ability to influence price
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