Theme 6: Seminar B FC700: Economics Part A: Discussion questions based on homework article 1. How...
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Theme 6: Seminar B FC700: Economics Part A: Discussion questions based on homework article 1. How does a typical household maximize satisfaction from consuming normal (e.g. premium steak) and inferior goods (e.g. Value/frying steak) subject to constraints? State any assumptions. 2. Based on the article, we can see that the prices of supermarket own brand (value products - inferior goods) have increased compared to premium quality products (normal goods). Based on your assumptions in question 1, use a diagram to explain the effect of the increase in the price of a value product (frying steak) on the optimal consumption bundle, distinguishing between substitution effect and income effect. Theme 6: Seminar B FC700: Economics Part A: Discussion questions based on homework article 1. How does a typical household maximize satisfaction from consuming normal (e.g. premium steak) and inferior goods (e.g. Value/frying steak) subject to constraints? State any assumptions. 2. Based on the article, we can see that the prices of supermarket own brand (value products - inferior goods) have increased compared to premium quality products (normal goods). Based on your assumptions in question 1, use a diagram to explain the effect of the increase in the price of a value product (frying steak) on the optimal consumption bundle, distinguishing between substitution effect and income effect.
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Related Book For
Statistics For Business And Economics
ISBN: 9780321826237
12th Edition
Authors: James T. McClave, P. George Benson, Terry T Sincich
Posted Date:
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