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.
In a graphical diagram illustrating relative consumption, the substitution slope represents the relationship of the substitution of any pair of goods with respect to one another at different prices out of a given income.
