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the main reason people tend to go for smaller rims is that they tend to be narrower then larger around rims, and they tend to be lighter weight as well, you are correct that a larger around tire will need to be spun slower for a given speed, allowing your engine to turn slower as well.
the only reason to go with wider tires is if vehicle weight goes up, as wider tires normally have a higher load range, and just like on a bicycle, you want the narrowest tires you can get away with, and a narrow tire is going to need to be at a higher pressure to give the same amount of support.
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