The substitution effect in economics refers to the change in the consumption pattern of a good or service, caused by a change in its relative price. When the price of a good or service increases, consumers tend to substitute it with a cheaper alternative, and vice versa. This effect is based on the assumption that consumers aim to maximize their utility or satisfaction, and will choose the best combination of goods and services that they can afford. The substitution effect is an important concept in microeconomics, as it helps to explain how changes in relative prices affect consumer behavior and market demand.