The substitution effect is the portion of a change in quantity demanded that is due to a change in the relative price of the good. true / false.

True.                              

Explanation:

As per the substitution effect, when price of a good rises, keeping other factors and consumer's income constant, the consumer's quantity demanded of that good falls with the fall being attributable to a demand created for it's substitute.

For example coke and pepsi are both priced at 2$ apiece. The demand for coke being 5 units by a consumer. Suppose, the price of coke rises to 3$ assuming other factors affecting demand remaining constant, the consumer now demands lesser units of coke i.e 3 units of coke and 2 units of pepsi. This reduction of 2 units of quantity demanded of coke is attributable to substitution effect.

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