The Substitution Effect

question 32

Multiple Choice

The substitution effect:

• A) Is typically more descriptive for taxpayers with lower disposable income.
• B) Predicts that taxpayers will work harder to pay for consumer products when tax rates increase.
• C) Results in the government collecting more aggregate tax revenue than under the income effect.
• D) Is one of the effects considered in static forecasting.
• E) None of the choices are correct.

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Definitions:

Ecosystem

A biological community of interacting organisms and their physical environment.

Primary Consumers

Organisms that feed on primary producers; they are usually herbivores that eat plants and algae.

Green Plants

Photosynthetic, plant organisms that contain chlorophyll and produce oxygen as a byproduct of photosynthesis.

Herbivores

Animals that primarily eat plants or plant-based materials.