In a free market with no taxes, there is high productivity and low equality. With government intervention, taxes can be implemented in order to create more equality but lower productivity. If the government wants to tax buyers and sellers, the total equilibrium quantity produced will decrease.

A market economy is a type of economic system where the production and distribution of goods and services are primarily determined by the interaction of supply and demand in a free market. In a market economy, the role of the government is generally limited, and most economic decisions are made by individuals and businesses operating in the market.

Diminishing marginal returns is a concept in economics that describes the decrease in the marginal output or production as additional units of a variable input are added while holding all other inputs constant. In other words, as more and more units of a variable input are added to a fixed amount of other inputs, the marginal product of the variable input will eventually decrease.