The substitution effect will never induce a consumer to buy more of a good when its price increases.

Question

Quizplus · Accepted Answer

The substitution effect describes the change in consumption of one good as a result of a change in its price relative to the price of other goods. When the price of a good increases, consumers will generally substitute it for a cheaper alternative, reducing their consumption of the more expensive good. Therefore, the substitution effect will not cause a consumer to buy more of a good when its price increases.

The Substitution Effect Will Never Induce a Consumer to Buy