yes, its a true or false question
is this a true or false question?
Suppose that after a price change, the income effect is zero, but the substitution effect is not. For such a good, the quantity demanded is directly related to its price.
oh well I think it is true.
hummmm.
The quantity demanded is also related to the price of the substitute good.
To determine whether the statement is true or false, let's break it down and analyze each component separately.
1. "Suppose that after a price change, the income effect is zero, but the substitution effect is not."
The income effect refers to the change in the quantity demanded of a good due to a change in purchasing power resulting from a change in its price. If the income effect is zero, it means that the change in price does not affect the consumer's purchasing power, and therefore, their demand for the good remains constant.
The substitution effect, on the other hand, refers to the change in the quantity demanded of a good due to a change in relative prices compared to other goods. If the substitution effect is not zero, it means that the change in price of this good affects the consumer's decision to substitute this good with other similar goods.
2. "For such a good, the quantity demanded is directly related to its price."
This statement implies that the quantity demanded of the good is directly influenced by a change in its price. In economics, the law of demand states that as the price of a good increases, the quantity demanded decreases, and vice versa. So if the quantity demanded is directly related to the price, it means that a change in price will lead to a corresponding change in quantity demanded, following the law of demand.
In summary, based on the information given, the statement seems to be true. If the income effect is zero, but the substitution effect is not zero, it implies that the change in price of the good affects the consumer's decision to substitute it with other similar goods. Therefore, the quantity demanded will be directly related to its price.