SUBSTITUTION EFFECT/Next/Next

Substitution Effect represents consumer's movement on her/his indifference map from one optimal consumption combination to another as a result of change in relative price alone, real income of the consumer remaining unchanged.

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 * People respond to relative price changes in order to maximize the utility of spendable income. The substitution effect represents changes in optimal consumption combination on account of changes in relative prices of goods.

(1) Essays in Honour of Malcolm Sawyer Edited by Philip Arestis

(2) Visit Amazon's Dominick Salvatore Page

(3) Bradley R. Schiller (2011)The Micro Economy Today (11Edition) Tata McGraw-Hill