| 单词 | substitution effect |
| 释义 | substitution effectsubstitution effectthe substitution of one PRODUCT for another resulting from a change in their relative prices. A fall in the price of a product normally results in more of it being demanded. A part of this increase is due to the substitution effect. A lower price for good X, with the prices of other goods remaining unchanged, will increase its relative attractiveness, inducing consumers to substitute good X in place of some of the now relatively more expensive items in their budgets. The substitution effect, together with the INCOME EFFECT, provide an explanation of why DEMAND CURVES are downward sloping. See CONSUMER EQUILIBRIUM, REVEALED PREFERENCE, PRICE EFFECT. |
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