Imagine you travel to the Cayman Islands with your twin. You both start with the same income. You choose to rent a car with upfront cost, while your brother chooses to take a taxi. Remember, you both have the same income; only different opportunity cost of miles traveled.

def. Substitution effect is when you change the consumption of a good due to a change in opportunity costs.

Observe that you are still on the same indifference curve; the utility is the same.

The size of the effect has to do with how substitutable the two goods are; the more subsitutable the two goods, the bigger the substitution effect is (obvious verbally and graphically):