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How to explain The substitution effect is positive（2）？

幫考網(wǎng)校2020-10-15 15:44:52

The substitution effect is positive because it refers to the tendency of consumers to switch to a less expensive alternative when the price of a good or service increases. This means that as the price of a good or service increases, consumers will look for cheaper alternatives, which will lead to an increase in demand for those alternatives. This shift in demand towards cheaper alternatives will ultimately benefit consumers by allowing them to purchase the same goods or services at a lower cost. Therefore, the substitution effect is considered positive because it helps consumers to maintain their purchasing power in the face of rising prices.