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The substitution effect is the change in an item’s consumption associated with a change in the...

The substitution effect is the change in an item’s consumption associated with a change in the price of the item, with the level of ________________ held constant.

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Answer #1

Answer: utility

The substitution effect shows that the utility remains the same but when the price of a product changes. The utility may not be achieved by consuming the same product. When a particular product's price increases, the demand for the product decreases, and the demand for its substitution product with negative price change or no price change will increase. So, the utility remains the same. The consumer of one product switch to consume other products.  

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