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  2. Share Prices
  3. Finance Glossary
  4. Terms Beginning With S
  5. Substitution Effect

Substitution Effect

Definition of 'Substitution Effect'

The Substitution Effect of a price change is the adjustment of demand to the relative price change alone.

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Related Terms

Diminishing Marginal Rate of SubstitutionMarginal Rate of SubstitutionAnnouncement EffectIncome EffectBankruptcyBeta UngearedClientele EffectComparative Static AnalysisCurrent Cost AccountingEarnings DilutionEfficiency WagesExcise DutyGradualist MonetaristsNatural HedgePerfectly Competitive MarketRepurchase AgreementSensitivity AnalysisSmall Firm EffectStakeholder

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