How Do People’s Budget, Income, and Substitution Effects Fit In?
Today, people are more careful regarding their spending. Most people spend according to their budgets. This helps them ensure that they first pay important bills before spending on luxury stuff. Although there have been significant rises in people’s income levels, they are still finding it hard to fit in or survive in the society because people have families and children to take care of ( McTaggart, Findlay, & Parkin, 2015) . For instance, some families have children, and thus they need money to provide their children with basic needs such as education, food, clothing, and shelter. People tend to take a closer look at their budgets to survive ( McEachern, 2013) . Therefore, people’s incomes and budgets care vital factors when deciding to purchase a George Foreman Grill or a substitute brand, which would be much cheaper.
How Do You Think This Influences The Demand Curve for Indoor Grill Products?
Changes in consumer income levels, prices of different grills in the market, and changes in consumer tastes and preferences cause shifts in demand for indoor grills ( Clip Syndicate, n.d) . Any increase in the demand for indoor grill products is likely to cause an upward move on the demand curve. However, if the prices of the products were high, it would effectively cut the disposable incomes. This would lead to reduced demand for the product thus a downward shift in the demand curve. Also, if the price of this product increases, then, this will encourage consumers to switch to substitute Grills.
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Are These Choices Made Rationally?
No, these choices are not made rationally; they are rather based on emotions/feelings. Emotions refer to the feelings that make people to react, act, and can largely influence people’s buying decisions ( Arnold, 2007) . People naturally buy when they feel comfortable when they feel the product is reassuring and when they feel that buying the product will make them feel good.
Do You Expect Beef Prices to Increase Next Year? Why or Why Not?
I believe that beef prices will continue to increase in the coming year. As seen this year, the demand for beef increased which led to an increase in the production of this product. We are aware of the impact of the current drought on feed prices and water sources (Investopedia, 2018). Therefore, the high demand for beef coupled by the increasing cost of water will drive up prices. However, the consumer could get relief by going for alternative products such as pork, fish and chicken meat.
References
Clip Syndicate. (n.d). Gale: Biography in context - economist: beef prices could stay high. Clip Syndicate . Retrieved Feb. 26 2018 from http://www.clipsyndicate.com/video/playlist/10833/5242860?cpt=8&title=cengage_broadcast&wpid=6424
Investopedia . (2018). How does the law of supply and demand affect prices? Investopedia. Retrieved Feb. 26 2018 from https://www.investopedia.com/ask/answers/033115/how-does-law-supply-and-demand-affect-prices.asp#ixzz58QZeRGht
McEachern W. A. (2013). Microeconomics: A contemporary introduction . New York, NY: Cengage Learning
Arnold R. A. (2007). Economics. New York, NY: Cengage Learning
McTaggart, D., Findlay, C. & Parkin, M. (2015). Economics. Sydney: Cengage Learning AU
