substitution effect

substitution effect definition - business

substitution effect

The extent to which a price change in a good or service will cause consumers to substitute other goods or services. For example, an increase in the price of cable service will cause some consumers to drop cable service for satellite or fiberoptic service.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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