The substitution effect suggests that when consumers judge product quality by price, they will substitute high-priced products for low-priced products.Topic: Income and Substitution Effects Topic: Utility
Maximization and the Demand Curve

Question

Quizplus · Accepted Answer

The substitution effect refers to consumers substituting a product with a cheaper alternative when the price of the original product increases, not substituting high-priced products for low-priced ones.

The Substitution Effect Suggests That When Consumers Judge Product Quality