In each of the following cases, discuss how the taxpayers might respond to a tax rate increase in a manner consistent with the substitution effect.
a. Mr. H earns $195,000 a year as a salaried employee, and Mrs. H doesn’t work.
b. Mr. J earns $195,000 a year as a salaried employee, and Mrs. J earns $38,000 a year as a salaried employee.
c. Ms. K is single and earns $195,000 a year as a self-employed consultant.