Substitution effect
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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.
