I am trying to grasp the concept of income- and substitution effects.
The way, I've understood it, the decomposition bundle is found, at the original indifference curve, where the slope equals that of the new budget line.
Does this mean that if the price of both goods (assuming a simple model of 2 goods) change by the same percentage, the substitution effect is zero? As the slope of the budget line will remain unchanged.
This seems to intuitively make sense to me, but I would greatly appreciate a 100% confirmation, that this is correct.