Question 1
Across the world, consumers normally consider their income, budget, as well as the substitution effect when making decision on which products or services to purchase. A normal person who has financial knowledge of their income will choose on whether to buy beef or cheap meat, either in a restaurant or home consumption. In the contemporary world, people have to monitor how they spend their income or earnings. Notably, many people have resorted to create budgets in order to ensure that their expenditures adhere to priority. First, people normally pay their bills first before splurging on other lifestyle materials. Although people’s salaries have been increased and have budgets to adhere to, they still struggle to provide for basic needs. For instance, many people with families and children are always careful on their expenditures. Particularly, this is because their children need clothing and resources that assist them in their school work such as personal computers. Thus, people have to budget according to their income before buying George Forman Grill or any other cheaper grill, as it is not a priority. Notably, this is because they will compare its cost to the amount of use the grill will get.

Question 2
The increase in the price of beef will definitely have an impact on the demand curve for indoor grill products. In most cases, the decision to purchase a grill is influenced by the prices of meat, especially beef, which many people prefer. As such, the prices of indoor grill products are greatly determined by the price of beef. Since people have to budget on how to use their income before making a decision of purchasing a grill that is promoted by a famous person, the demand curve for indoor grill products will move to the left. The demand for the George Forman Grill will dwindle, as many people would not consider using one. Initially, the demand was on the right side of the curve since many people purchased the grill because a famous man had endorsed it; however, people realized that the grill was not a basic requirement.

Question 3
The consumers do not make rational decisions because they have not made detailed research on the product, but purchase the product because of the endorsement. However, if they did research on the product, they would have purchased cheaper models. It is noteworthy that people are normally influenced by the prices of products. For instance, most people purchase products that are highly priced as they presume them to be of better quality than those with low prices. On the other hand, most consumers make rational decisions before purchasing a product or good, especially those who are financially aware.

Question 4
Definitely, the beef prices will increase next year based on the video by the KCRA News in 2014. With the increasing number of beef consumers, the demand curve will continue shifting to the right due to low supply. According to the KCRA News, there has been an increase in the number of beef export to other countries that are currently consuming more beef than before as well as a dwindling supply of cattle, which has partly been caused by drought. While there has been a considerable increase of beef production since 2016, the demand for beef has soared, creating an imbalance in the demand curve. Due to the increase in demand, the cost of water and corn, which are significant resources in cattle rearing, will continue to increase. Indeed, this will lead to an increase in beef prices. While other cuts of beef will maintain their prices, higher quality cuts such as New York strips and Filet Mignon will increase due to their rarity.