FHCE 3150 Study Guide - Midterm Guide: Veganism, Hyperbolic Discounting, Inferior Good

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Designed to conserve fuel without making the consumer worse off. Substitution effect - people use things other than fuel. Income effect - increased spending on fuel because of the tax. Substitution effect is larger than income effect (goal is achieved) If parents could use (public) school tax to pay for private school (higher quality education) they would buy more education. Would have a more highly educated population. More utility is gained from a purchase than was given up. = area under the demand curve of the items bought - amount the consumer paid for the goods. Charging a flat up-front access fee for the product or service in addition to a per unit charge. When prices change from one year to the next Consumers adjust their market basket and their overall welfare will be impacted. Substituting between income and housing in ways that make them better off.

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