Income and Substitution EffectsThe effect of a change in the price of a good on the quantity demanded of itcan be decomposed into an income and substitution effect. Income and Substitution EffectsThe income effect is the effect that the change in consumer real income resulting from the change in the price of the product has on the quantity demanded.The substitution effect is the effect on quantity demanded resulting from the changed relative price of the product. Income and Substitution EffectsX X 0 0Y YX X1 1X X2 2Y Y1 1Y Y2 2