Goods Substitution

Substitution Effect
The substitution effect in economics refers to the change in consumption patterns due to a change in the relative prices of goods. When the price of a good decreases, consumers are more likely to substitute it for other goods, increasing their consumption of the now cheaper good. Conversely, when the price of a good increases, consumers will tend to switch to substitutes that have become relatively cheaper.

Accounting Terms Lexicon

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