The substitution effect refers to one of the reasons that helps to explain why a demand curve is sloping. In relation to the demand for rice, a rise in the price of rice means that the price of substitute products, such as pasta, will fall. This results in substituting away from rice and towards pasta. This substitution effect is distinct from a fall in the actual (or ) price of pasta, which might occur due to improvements in at pasta processing plants. The key difference between the two effects stems from the difference between relative prices and absolute prices. The substitution effect is consistent with no change in the actual or absolute price of pasta and relies on an increase in the price of rice, whereas ‘the change in the price of the substitute (pasta)’ does indeed reflect the absolute price of pasta changing ( in this example).