Analysis of substitution and income effects at increasing the efficiency of tax system

Government disposes with instruments applications of which have a final effect on decisions of a consumer in a choice of his optimal consumption strategy. These regulations include: prices of basket of consumers goods; levels of disposable income of a consumer. In this paper basic instruments of the fiscal policy, with the help of which government affects the level of disposable income of a consumer, are described and basic notions of microeconomic theory and analysis of income and substitutions effects in decision making of a consumer are explained.