The substitution effect refers to the effect of a change in price on quantity demanded arising from the consumer becoming better or worse off as a result of the price change.

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The substitution effect refers to the change in quantity demanded resulting from a change in the price of a good, making it more or less expensive relative to other goods, leading consumers to substitute the good with others. It does not refer to the consumer becoming better or worse off due to the price change; that concept is related to the income effect.

The Substitution Effect Refers to the Effect of a Change