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ALLOCATION EFFECT: The goal of imposing taxes to change the allocation of resources, that is, to discourage the production, consumption, or exchange or one type of good usually in favor of another. This is one of two reasons that governments impose taxes. The other reason is the revenue effect. Because people would rather not pay taxes, taxes create disincentives to produce, consume, and exchange. If society deems that less of a particular good, such as alcohol, pollution, or cigarettes are "bad," then a tax can reduce its production and consumption, and thus change the allocation of resources.
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MARGINAL REVENUE PRODUCT AND FACTOR DEMAND A perfectly competitive firm's factor demand curve is that negatively-sloped portion of its marginal revenue product curve. A perfectly competitive firm maximizes profit by hiring the quantity of input that equates factor price and marginal revenue product. As such, the firm moves along its negatively-sloped marginal revenue product curve in response to changing factor prices.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time flipping through mail order catalogs wanting to buy either income tax software or a how-to book on the art of negotiation. Be on the lookout for attractive cable television service repair people.
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A lump of pure gold the size of a matchbox can be flattened into a sheet the size of a tennis court!
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"Wherever you go, no matter what the weather, always bring your own sunshine." -- Anthony J. D'Angelo
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ERISA
Employee Retirement Income Security Act of 1974
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