Substitution effect | Trade Samaritan

Substitution effect

An effect caused by a rise in price that induces a consumer (whose income has remained the same) to buy more of a relatively lower-priced good and less of a higher-priced one. Consumers always to tend to shift from spending on higher priced product to a lower priced one as the prices rise.

An effect caused by a rise in price that induces a consumer (whose income has remained the same) to buy more of a relatively lower-priced good and less of a higher-priced one. Consumers always to tend to shift from spending on higher priced product to a lower priced one as the prices rise.

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