When the price of a good rises and income remains constant, there is a substitution effect on demand but there cannot be an income effect.

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Nathan Gurley · Accepted Answer

Final Answer : False, Explanation :  When the price of a good rises and income remains constant, there is not only a substitution effect (where consumers may substitute the more expensive good for a cheaper alternative) but also an income effect. The income effect occurs because the consumer's purchasing power decreases with the price increase, effectively making them feel poorer, which can lead to a decrease in the quantity demanded of the now more expensive good.

When the price of a good rises and income remains constant, there is a substitution effect on demand but there cannot be an income effect.

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