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How do people’s budget, income, and substitution effects fit in?  

George Foreman was a professional boxer who made a comeback by endorsing grills. Foreman does not own the company that makes the grills, but he became the face of the brand. At first, people were not certain whether he was an expert on grills or fat-free cooking, but Foreman soon became thought of as the expert on this product and this type of cooking. Think of the concept of utility and how Foreman’s role as a celebrity endorser affects the marginal utility of these grill products. Some individuals may use a Foreman grill to grill beef.  Please review this video:
Gale: Biography in Context – Economist: Beef Prices Could Stay High (2 minutes)
http://www.clipsyndicate.com/video/playlist/10833/5242860?cpt=8&title=cengage_broadcast&wpid=6424
Answer the following:
•How do people’s budget, income, and substitution effects fit in?
•How do you think this influences the demand curve for indoor grill products?
•Are these choices made rationally?
•Do you expect beef prices to increase next year? Why or why not?

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