ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -It means with the same money cheaper goods can be purchased and less expensive goods. So when relative price change, the quantity demanded of good changes keeping the level of utility remains constant is called the substitution effect.

Detailed explanation-2: -Increase in Quantity Demanded The proportion that quantity demanded changes relative to a change in price is known as the elasticity of demand and is related to the slope of the demand curve.

Detailed explanation-3: -The substitution effect states that when the price of a good decreases, consumers will substitute away from goods that are relatively more expensive to the cheaper good.

Detailed explanation-4: -Substitutes are goods that satisfy a similar need or desire. a. An increase in the price of a good will increase demand for its substitute, while a decrease in the price of a good will decrease demand for its substitute.

Detailed explanation-5: -The substitution effect happens when consumers replace cheaper items with more expensive ones due to price changes or when their financial conditions improve, and vice-versa.