Continuing our example, we're assuming that the price of movies has risen. This means that going to a movie has become relatively more expensive, in comparison to other forms of entertainment. You might now go to fewer movies because, relative to other alternatives, they are now more costly. This is the substitution effect of a price change, or simply the substitution effect.

   Even though both the income and substitution effect result from price changes, the income effect of a price change works like a change in income; meaning, one's consumption changes as it would if income had actually changed. Whether a good is considered normal or inferior by the consumer will determine how the income effect will alter consumption.

   Through careful graphical economic analysis, we can examine each of these effects separately.

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