Exchange Currency

substitution effect

A theory that states that purchasers of products or services will substitute to less expensive alternatives if either the price of their preferred product or service rises or if their income goes down. The opposite effect is also believed to be true.

Related information about substitution effect:
  1. Substitution Effect Definition | Investopedia
    The idea that as prices rise (or incomes decrease) consumers will replace more expensive items with less costly alternatives. Conversely, as the wealth of ...
     
  2. Consumer choice - Wikipedia, the free encyclopedia
    The substitution effect is the effect observed with changes in relative price of ... and a substitution effect; the price effect is the sum of substitution and income ...
     
  3. What is substitution effect? definition and meaning
    Definition of 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 ...
     
  4. Microeconomics: Income and Substitution Effects
    Feb 8, 2011 ... Substitution effect : the impact that a change in the price of a good has on the quantity demanded of that good, which is due to the resulting ...
     
  5. Income and Substitution Effects — A Summary
    Sometimes we might want to separate the effects. The Substitution Effect is the effect due only to the relative price change, controlling for the change in real ...
     
  6. substitution effect - AmosWEB
    The substitution effect offers part of an explanation for the law of demand and the negative slope of the demand curve. It rests on the observation that a change in ...
     
  7. Income and Substitution Effects of a Price Change - Krypton
    the substitution effect, the consumer, taking into account the new relative prices, switches between goods in order to keep her overall level of satisfaction ...
     
  8. Substitution Effect: Definition from Answers.com
    In economics, the effect of a change in the price of a commodity, which encourages consumers to substitute one good for another.