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Price Is the Rationing Mechanism in a Free, Competitive Market

question 200

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Price is the rationing mechanism in a free, competitive market.


Definitions:

Inelastic

Describing demand that does not change significantly when the price of a good or service changes.

Excess Burden

The cost to society created by market inefficiency, particularly through the misallocation of resources or distortions in the market.

Excess Burden

The cost to society created by market inefficiency, often associated with the distortionary effects of taxes and subsidies.

Tax Revenue

The income that is gained by governments through taxation, used to fund public services and government obligations.

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