True/False: Under Leontief preferences, there is no substitution effect as prices change.

Answer:
True. Leontief preferences mean that a consumer treats goods as though they were perfect complements (e.g. left shoes and right shoes). Intuitively, changes in price do not cause consumers to substitute left shoes for right shoes. In fact, the only effect is an income effect: real income goes down when prices increase, and real income increases when prices decrease.