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.