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Taxation. Government Spending. and Income and Substitution Effects: 6. Suppose that each of the following occurs because of a change in taxation or government spending:
Taxation. Government Spending. and Income and Substitution Effects: 6. Suppose that each of the following occurs because of a change in taxation or government spending: (a) price of running ("tap") water rises to $10 per gallon (b) tuition at the CSU campuses rises by $1,000 per semester (c) price of Pepsi rises by $1.00 per 12-ounce bottle Carefully explain the respective income effects and the substitution effects of these changes. (NOTE. I want to see that you understand the intuition of these effects)
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