Assume the government introduces a $0.50 per gallon tax on gasoline.Which of the following is true?

Question

Quizplus · Accepted Answer

When gasoline becomes more expensive due to a tax, consumers may opt to use alternative modes of transportation such as the subway or bus. This is also supported by the principle of the substitution effect, where consumers may switch to other goods or services when the price of a particular item increases. Therefore, the quantity of subway and bus tickets sold is likely to increase. The other choices are unlikely to occur as a result of a gas tax.

Assume the Government Introduces a $0