March 20, 2018 

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ABILITY-TO-PAY PRINCIPLE: A principle of taxation in which taxes are based on the income or resource-ownership ability of people to pay the tax. The income tax collected by our friends at the Internal Revenue Service is one of the most common taxes that seeks to abide by the ability-to-pay principle. In theory, the income tax system is set up such that people with greater incomes pay more taxes. Proportional and progressive taxes follow this ability-to-pay principle, while regressive taxes, such as sales taxes and Social Security taxes, don't.

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Lesson 7: Market | Unit 1: The Exchange Page: 3 of 22

Topic: Competition <=PAGE BACK | PAGE NEXT=>

Competition (especially our fourth rule of competition) brings out the best among buyers and sellers, that is, efficient use of resources.
  • Competition among sellers forces them to supply the most wanted products at the lowest resource cost.
  • Competition among buyers forces them to spend their limited incomes on the most satisfying goods.
  • Less competition among sellers than among buyers lets the sellers charge higher prices.
  • Less competition among buyers than among sellers lets the buyers pay lower prices.

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A curve that graphically represents the relation between average variable cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between average variable cost and the level of output, holding other variables, like technology and resource prices, constant. The average variable cost curve is one of three average curves. The other two are average total cost curve and average fixed cost curve. A related curve is the marginal cost curve.

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Today, you are likely to spend a great deal of time at an auction trying to buy either a how-to book on home repairs or a large, stuffed kitty cat. Be on the lookout for deranged pelicans.
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In the late 1800s and early 1900s, almost 2 million children were employed as factory workers.
"Look at the abundance all around you as you go about your daily business. You have as much right to this abundance as any other living creature. It's yours for the asking."

-- Earl Nightingale

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