What is an example of the substitution effect?

The substitution effect occurs when a change in the price of a good leads consumers to replace it with a different good that is now relatively cheaper or more attractive. When the price of pizza decreases, it becomes a more appealing option for consumers compared to other goods, such as bread or meat. As consumers recognize the better value that pizza offers, they are likely to buy more pizza instead of its substitutes. This response illustrates the substitution effect clearly, as the decreased price encourages a shift in consumer purchasing behavior toward the less expensive alternative.

In contrast, the other options do not demonstrate the substitution effect as directly. For example, an increase in the price of bread may influence consumer behavior, but it doesn’t specifically relate to replacing a good with a cheaper alternative. Similarly, a decrease in meat prices or the rise of fast food popularity may impact consumer choices, but they don't encapsulate the direct relationship between two goods that the substitution effect describes.