Can I set state inside a useEffect hook

Lets say I have some state that is dependent on some other state (eg when A changes I want B to change).

Is it appropriate to create a hook that observes A and sets B inside the useEffect hook?

Will the effects cascade such that, when I click the button, the first effect will fire, causing b to change, causing the second effect to fire, before the next render? Are there any performance downsides to structuring code like this?

let MyComponent = props => {
  let [a, setA] = useState(1)
  let [b, setB] = useState(2)
  useEffect(
    () => {
      if (/*some stuff is true*/) {
        setB(3)
      }
    },
    [a],
  )
  useEffect(
    () => {
      // do some stuff
    },
    [b],
  )

  return (
    <button
      onClick={() => {
        setA(5)
      }}
    >
      click me
    </button>
  )
}