Suppose the market wage for cashiers increases from $7 per hour to $9 per hour. as a result, pat, who is a cashier, now works five more hours per week. on the other hand chris, who is also a cashier, now works five fewer hours per week. pat's behavior illustrates the effect of a wage increase. supply

Pat's behavior illustrates the "substitution" effect of a wage increase.

The substitution effect is the adjustment in utilization designs because of an adjustment in the relative costs of products. For instance, if private colleges increment their educational cost by 10% and state funded colleges increment their educational cost by just 2%, at that point it is likely that we would see a move in participation from private to state funded colleges (at any rate among students acknowledged to both). The same can be said crosswise over brands, merchandise, and even classifications of products. Illustrations would be the relative cost of Pepsi versus Coke, Red Meat versus Poultry and Clothes versus Diversion.

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