The substitution effect is

Question

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The substitution effect measures the change in consumption due to a change in relative prices of two goods, while the income effect measures the change in consumption due to a change in income. The direction and magnitude of these effects depend on the specific situation. In some cases, the substitution effect may be less than the income effect, such as when a good becomes more expensive and the consumer switches to a cheaper substitute, but also reduces overall consumption due to the higher cost. However, it is not always the case that one effect is greater or lesser than the other, as it depends on the specific preferences and budget constraints of the consumer. Therefore, choices A, B, and C are incorrect.

The Substitution Effect Is