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 REGRESSIVE TAX: A tax in which people with more income pay a smaller percentage in taxes. A regressive tax is given by this example--You earn \$10,000 a year and your boss gets \$20,000. You pay \$2,000 in taxes (20 percent) while your boss also pays \$2,000 in taxes (10 percent). Examples of regressive taxes abound (is this surprising given the political clout of the wealthy?), including sales tax, excise tax, and Social Security tax.
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 Lesson Contents Unit 1: The Set Up Demand Review Bring On Utility Choices Unit 1 Summary Unit 2: A Simple Choice One Good Demand For A Good Unit 2 Summary Unit 3: Complex Choices Two Goods How Much Of Each? A Short Cut? Income And Prices Rule Of Consumer Equilibrium Unit 3 Summary Unit 4: On To Demand A Generalized Choice A Price Change Marginal Utility Curve Unit 4 Summary Unit 5: Beyond Demand Many Choices Demand Elasticity Market Supply Unit 5 Summary Course Home
Utility and Demand

This lesson undertakes a detailed investigation into the decision-making process underlying the purchase of goods and services. Doing so provides a behind-the-scenes examination of market demand, offering an explanation for the inverse relation between demand price and quantity demanded that is the law of demand.

• The first unit of this lesson, The Set Up, begins with a review of the market demand and consumer demand theory.
• In the second unit, A Simple Choice, we examine the decision-making process for purchasing a single good.
• The third unit, Complex Choices, then complicates matters slightly by adding a second good into the decision making mix.
• The fourth unit, On To Demand, presents the rule of consumer equilibrium that captures the essence of this decision-making process and how it helps explain the law of demand.
• The fifth unit and final unit, Beyond Demand, explores how consumer demand theory provides insight to noneconomic choices, demand elasticity, and market supply.

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AGGREGATE DEMAND AND MARKET DEMAND

The aggregate demand curve, or AD curve, has similarities to, but differences from, the standard market demand curve. Both are negatively sloped. Both relate price and quantity. However, the market demand curve is negatively sloped because of the income and substitution effects and the aggregate demand curve is negatively sloped because of the real-balance, interest-rate, and net-export effects.

 BLUE PLACIDOLA[What's This?] Today, you are likely to spend a great deal of time calling an endless list of 800 numbers looking to buy either a rim for your spare tire or decorative celebrity figurines. Be on the lookout for fairy dust that tastes like salt.Your Complete Scope
 On a typical day, the United States Mint produces over \$1 million worth of dimes.
 "Man is born to live, not to prepare for life. "-- Boris Pasternak, writer
 TVCTotal Variable Cost
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