Here we show the substitution effect alone. No matter whether the good is normal or inferior, the substitution effect will always lead to a decrease in consumption if price increases and an increase in consumption if price falls.

   Increased consumption of movies (points to the right of MO) on the compensated budget would make her worse off than MO, her original movie consumption. Even when we compensate her for the fact that the price increase made her worse off she still reduces her consumption of movies now that they are more expensive. She substitutes away from them to other, relatively cheaper goods.

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