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The benefit principle is a concept in the theory of taxation from public finance. It bases taxes to pay for public-goods expenditures on a politically-revealed willingness to pay for benefits received. The principle is sometimes likened to the function of prices in allocating private goods. [1] In its use for assessing the efficiency of taxes ...
Allocative efficiency is a state of the economy in which production is aligned with the preferences of consumers and producers; in particular, the set of outputs is chosen so as to maximize the social welfare of society. [1] This is achieved if every produced good or service has a marginal benefit equal to the marginal cost of production.
Cost–benefit analysis (CBA), sometimes also called benefit–cost analysis, is a systematic approach to estimating the strengths and weaknesses of alternatives.It is used to determine options which provide the best approach to achieving benefits while preserving savings in, for example, transactions, activities, and functional business requirements.
Optimal foraging theory predicts that this bee will forage in a way that will maximize its hive's net yield of energy. Optimal foraging theory ( OFT) is a behavioral ecology model that helps predict how an animal behaves when searching for food. Although obtaining food provides the animal with energy, searching for and capturing the food ...
Marginal revenue is an important concept in vendor analysis. To derive the value of marginal revenue, it is required to examine the difference between the aggregate benefits a firm received from the quantity of a good and service produced last period and the current period with one extra unit increase in the rate of production.
e. Optimal tax theory or the theory of optimal taxation is the study of designing and implementing a tax that maximises a social welfare function subject to economic constraints. [1] The social welfare function used is typically a function of individuals' utilities, most commonly some form of utilitarian function, so the tax system is chosen to ...
A narrower view of the theory of taxation reduces the system to two issues: who can pay and who can benefit ( Benefit principle ). Influential theories have been the ability theory presented by Arthur Cecil Pigou [2] and the benefit theory developed by Erik Lindahl. [3] [4] There is a later version of the benefit theory known as the "voluntary ...
Likewise, the marginal revenue associated with the production division can be separated from the marginal revenue for the total firm. This is referred to as the net marginal revenue in production (NMR) and is calculated as the marginal revenue from the firm minus the marginal costs of distribution. Transfer pricing with a competitive external ...