Macro - Teleconverter or extension tubes?

[ameerat42]

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Is it true the teleconverter allows you to magnify the subject at the same distance, or shoot x times as far away and get the same size as you would without it, and the extension tubes allow you to focus closer to a subject?

If that's true, then wouldn't the extension tubes smaller focus distance make it harder to get close enough to a bug without scaring it, whereas the TC will allow you to achieve the same results from a regular distance (with small IQ degrading)?...

Yes.

What happens is that the - say 2X - teleconverter doubles the linear size, X4 the area and X1/4 the light intensity. So you lose 2 stops of exposure value with a 2X converter: what looks like f/4 on the lens is in fact f/8. They just magnify the image.
Am.

Just saw your last bit. The degradation of image quality is there just because you are introducing another optical element. However, its effect may be LARGE, or SMALL, or even negligible. If the latter, you will not even notice/see it, as it will be masked by other factors that go to make up the picture, like resolving power of the sensor.

I've used both 2X converters and extension tubes. Each method has its +/-s. You may consider getting a set of each, esp. if you're going to get into it some. Also (if you haven't already) consider reverse lens attachment.