Question

match the following terms to the correct definitions.

a tax that is a flat percentage; medicare tax is an example.
good that is nonexcludable and nonrival, and thus is difficult for market producers to sell to individual consumers.
people with higher incomes pay a lower percentage of their income in tax; people with lower incomes pay a higher percentage of their income in tax.
a tax whose rate increases as a households income increases; income tax is an example.
when the market on its own does not allocate resources efficiently in a way that balances social costs and benefits.

options:
market failure
progressive tax
public goods
regressive tax
proportional tax

Explanation:

Match proportional tax definition

Using the Proportional Tax knowledge point

• Definition: "A tax that is a flat percentage; Medicare tax is an example."
• This describes a tax system where everyone pays the same percentage of their income, which is a proportional tax.

Match public goods definition

• Definition: "Good that is nonexcludable and nonrival, and thus is difficult for market producers to sell to individual consumers."
• Nonexcludable and nonrival characteristics define public goods.

Match regressive tax definition

Using the Regressive Tax knowledge point

• Definition: "People with higher incomes pay a lower percentage of their income in tax; people with lower incomes pay a higher percentage of their income in tax."
• This describes a regressive tax.

Match progressive tax definition

Using the Progressive Tax knowledge point

• Definition: "A tax whose rate increases as a household's income increases; income tax is an example."
• This describes a progressive tax.

Match market failure definition

• Definition: "When the market on its own does not allocate resources efficiently in a way that balances social costs and benefits."
• This is the standard definition of market failure.

Answer:

Definition	Term
Good that is nonexcludable and nonrival, and thus is difficult for market producers to sell to individual consumers.	public goods
People with higher incomes pay a lower percentage of their income in tax; people with lower incomes pay a higher percentage of their income in tax.	regressive tax
A tax whose rate increases as a household's income increases; income tax is an example.	progressive tax
When the market on its own does not allocate resources efficiently in a way that balances social costs and benefits.	market failure