The substitution effect insures that anytime there is a change in the price of a good,the quantity demanded along a compensated demand curve also changes.

Question

Quizplus · Accepted Answer

The substitution effect refers to the change in quantity demanded of a good as a result of a change in its price relative to the prices of other goods. Along a compensated demand curve, the change in price is offset by a change in income, but the substitution effect still causes a change in the quantity demanded.

The Substitution Effect Insures That Anytime There Is a Change