Substitution effect
Substitution effect is when a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price; always happens simultaneously with an income effect.
Definition
According to Principles of Economics by Timothy Taylor (3rd edition),
- Substitution effect. When a price changes, consumers have an incentive to consume less of the good with a relatively higher price and more of the good with a relatively lower price; always happens simultaneously with an income effect.
According to Macroeconomics by Mankiw (7th edition),
- Substitution effect. The change in consumption of a good resulting from a movement along an indifference curve because of a change in the relative price. (Cf. income effect.)