A price fall makes a good cheaper compared with its substitutes

When the price of a good falls while other prices stay the same, the good becomes relatively cheaper. Consumers have an incentive to buy more of it and less of the goods that are now relatively dearer. If apples get cheaper, fruit-lovers eat more apples and fewer pears or oranges.

This switch is the substitution effect. For a price fall it raises the quantity demanded of the cheaper good; for a price rise it lowers it.

A price fall also lets the same income buy more

A lower price raises the buying power of a consumer's income. A household that spends £12 a week on six loaves at £2 needs only £9 for the same loaves once the price falls to £1.50, leaving £3 spare. Its money income has not changed, but its real income, what that money can buy, has risen.

The income effect is the change in quantity demanded that comes from this change in buying power.