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Sep 3, 2019

Advisor Tipping Point: Waiting for The Substitution Effect

by John DeGoey
According to Investopedia, the “substitution effect” is: the component of a change in demand for a good as a result of a price change that can be attributed to substitution between different goods. As prices rise, consumers will replace more expensive items with less costly alternatives. Conversely, as the relative price of a good falls, consumers will purchase more of it relative to substitute goods. It should be obvious that the substitution effect can have a powerful impact...
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