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  • Assignment 3 Q3

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    tuhin
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    The document discusses the concepts of income effect and substitution effect as it relates to taxation and consumption. It explains that the income effect occurs when taxation reduces disposable income, causing people to consume less and save more for future consumption. The substitution effect means that when a tax is imposed, people substitute toward relatively cheaper consumption by shifting consumption from the present to the future.

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    The document discusses the concepts of income effect and substitution effect as it relates to taxation and consumption. It explains that the income effect occurs when taxation reduces disposable income, causing people to consume less and save more for future consumption. The substitution effect means that when a tax is imposed, people substitute toward relatively cheaper consumption by shifting consumption from the present to the future.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    7 views2 pages

    Assignment 3 Q3

    Uploaded by

    tuhin
    The document discusses the concepts of income effect and substitution effect as it relates to taxation and consumption. It explains that the income effect occurs when taxation reduces disposable income, causing people to consume less and save more for future consumption. The substitution effect means that when a tax is imposed, people substitute toward relatively cheaper consumption by shifting consumption from the present to the future.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
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