After Iraq invaded Kuwait gasoline prices rose dramatically – up to 50%. These were many effects of the increased price of gasoline.
Explain the following effects in terms of the income effect, or the substitution effect, or both effects.
a)People drove less and purchased less gas
b)People ate out less often
c. People had more tune-ups done on their cars
d. Bike sales went up
e. The sale of lottery tickets fell.
f. People took vacation closer to home