, the substitution
effect is the term used to describe the shift of a consumer
s purchasing choice away from a commodity
after its relative price
changes whilst maintaining the consumers total utility
. This effect is always negative
, signifying a move away from a commodity as its price is rising and the consumers try to maintain their standard of living.
When combined with income effect, substitution effect can be used to ascertain the total effect of a price change on the demand for a product.