 consumer behavior and under the consumer choices we are going to study the substitution effect. Considering the consumer's demand curve, we have the quantity demanded as usual that we have studied, that there are the basic three factors affecting the consumer demand, its own price, price of other goods and the income. When there will be the change in the price of the commodity, then what will be the change assumed to occur in the quantity demanded? And when the quantity demanded or the demand of the commodity it will change, then what will be the shape of the consumer demand or either this change, it will be same for every type of the commodity in the similar manner or it will be different. So, when we have to study this, first we study a very simple ordinary or the normal case. We study that if there is a change in the price, that will be called the price effect, but actually it will have the two types of the effect on the consumer demand. And these two consumers effect will be under the heading of income effect and the substitution effect. Income effect will be that when the price of a commodity it decreases, keeping the normal amount of the income or the money that is with the consumer fixed. Despite of this fact, due to reduction in the price, now the purchasing power of the consumer it enhances. So, with the decrease in the price, now the real income of the consumer it increases and vice versa if there is any change in the positive manner, meaning the price increase of a commodity, keeping the nominal income constant, purchasing power of the consumer it will decline. So, this effect of the change in the purchasing power that will be called income up. Now, with the decrease in the price if consumer is having more income, now he has to decide where he has to spend, either he has to spend this incremental amount of the income that is now he is having in his hand or incremental amount of the purchasing power on one commodity or he is going to spend this on again the both commodities of the bundle. Here a consumer has that additional amount in the form of saving, now what will he do to do that? So, when he is having original budget line and original indifference curve, tangency, so we call them both slope, so that was equal. Now, when that commodity X1's price has decreased, so we know that the slope of the budget line it becomes flatter. Becoming the flatter of this budget line it will require that now the consumer it must enhance the consumption of commodity X1. So, now the consumer instead of shifting on any other budget line or moving somewhere else, it is in the same income and on the same indifference curve, it switches its consumption as a substitution effect. Means, because the change in the slope of the budget line, to equate that slope, it can take on the same indifference curve or any other indifference curve, it shifts a point. So, this shifting will be called substitution effect. Now, if we want to do this substitution effect in detail, we say that substitution effect is basically two parts of it whose base we say is a complete operation that is called pivot and shift. Now, what is pivot? Pivot is that step in which the basic point of origin, we do not shift it, rather the curve or graph, we just move it around one point. We do not see the displacement or shifting in it. So, the consumer's price of commodity decrease and that commodity, because there is only one X1 decrease, so price 2, because price has not changed, so for that purpose, now consumer's budget line will not shift, rather consumer's budget line will just pivot out. Means, its original point on Y axis will remain same. So, this movement will come under the pivot movement. And now, with this new budget line, we see that this is having a particular slope that is different than the original budget line. Now, looking at this slope, which has increased in purchasing power, if we drag it forward, and when it goes to higher level of indifference curve, we will shift that movement under the shift and it will come from one indifference curve to the other indifference curve and from one budget line to the other budget line. Now, graphically, if we explain, we see that now the consumer is having this original budget line and this original budget line and now the consumer has, if this is the case, when we say that the consumer's price for the commodity, good X1 has decreased and in this form, now the consumer's budget line has shifted due to slope towards this. So, if this is the case and the consumer has to shift, now the consumer will shift from one indifference curve to this indifference curve and this movement to this, it will encompass two type of the operations. One will be the pivot and the other shift. So, when this original budget line and there is increase in the purchasing power due to reduction in the price, so this budget line slope, it shift to this and from here, if we draw, we can say that this indifference curve, it may extended up to this and we see that consumer shift to this part. So, up to this point to this, that will come under the pivot and from this point to this, it will come under the shift. So, when we explain, related to this, that the pivot line, it will just include the part of substitution that is along the same indifference curve and now the consumer was provided two points of various budget lines. It means consumer was dealing between two budget line of the different slope and now when the slope of the second budget line was extended and provided to the consumer, consumer got an opportunity to have a higher indifference curve and due to this, now again, the demand of the consumer, it increases not only of commodity X1, rather for the commodity of X2. Coming to this point, now we see again that at this curve, consumer was provided the opportunity to move from point X to point Y and this shifting, that will come under the pivot operation and now because this budget line was having the same slope, but now with the added income and this added income is just in the form of increase in the purchasing power due to reduction in the price. So, this shift from here to there, this will come under the income effect. So, this substitution effect and the income effect, but this substitution effect and the income effect, when we see, we say that the total effect, it is equal to substitution effect plus income effect, but this substitution and the income effect, they mostly not go in the same direction, keeping in view the nature of the commodity, it is possible that the both will reinforce or re-enhance to each other or it is also possible that they both will go in the opposite direction. If it is the case of a normal good, we see that there is a budget line and there is an indifference curve. Again with the decrease, now the budget line has shifted to the right side and now again a new indifference curve, point A to point C, but now it is shown that this shift from point A to point C, it was not directly possible, rather there was a step that was shown here and this green line is that budget line that we have drawn parallel to this new budget line that was possible due to change in the purchasing power. So, point A to B shows pivot and from point B to C it shows the shift and finally, we see that this point from A to B it will be true substitution effect and the other from point B to C it will be the income effect and when we both add up to this this from point A to C it will totally will be the total effect and in the normal good they both reinforce each other but when we take the case of the inferior good we again see the same budget line and shift of the slope again the same procedure but in this case from point A to B we see that this is the pivot or the substitution effect but this substitution effect is having an income effect from point B to C that is in the opposite direction. So, here the total effect will be equal to substitution effect and income effect and here the substitution effect and the income effect they both will have the negative directions to each other and they both can nullify the effect of each other. Now depending upon the level or the magnitude if income effect will be more then the consumer will be shifted towards left side more but this is the case when the consumer is having the preference for inferior good means when there will be the decrease in the price consumer will reduce its consumption and if it will be increased in the price so opposite to the normal good consumer will increase its consumption. So, in this way substitution effect it has the same direction either in the form of normal good either it is in the form of the inferior good but the direction of the income effect may vary for the different commodity.