The substitution effect of a price decrease for a good causes an increase in the consumption of the good, regardless of whether the good is normal or inferior.

Question

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The substitution effect occurs when a price decrease for a good makes it cheaper relative to other goods, leading consumers to substitute away from relatively more expensive goods towards the cheaper good, increasing its consumption regardless of the good's income effect or whether it is considered normal or inferior.

The Substitution Effect of a Price Decrease for a Good