We know that when real incomes fall then the demand for normal goods shifts to the left and less is bought at all prices. For inferior goods of course more is bought.
Is this the explanation for McDonald's? Well real incomes have been strained and some people have moved away from more expensive food to more 'affordable treats'. So this may be the reason.
However there are other factors in play. McDonald's have invested in their restaurants and staff and have promoted new products. So ceteris paribus does not apply.
Another reason could be that demand for McDonald's meals is elastic. They have many substitutes and they are not an essential item. So a price cut will have led to a rise in revenue.
Good. As far as I'm concerned, McDonald's has always been inferior, both for quality and as a type of good, it is what people turn to because its easy and most importantly cheap, that's why I go there at LEAST twice a term.
ReplyDeleteThis is no problem for them though as they are completely international and that's the reason they can afford low profit from singular goods but as a group they make the big revenue.
Also as far as I know, McDonald's haven't had any price cuts, at least recently, so how have elastic demand for their meals?
Of course it is inferior. If we had the money to eat in expensive restaurants every time we go to Horsham we would. The fact that as students we dont have much so we eat the rubbish McD's makes. The amount of money McD's spends on making it's food shows how much the regard it is an inferior good. If our incomes Rose we wouldn't eat there. If we have low incomes then we do eat there. What is not inferior about this. It would interesting to see how McD's did in 2008 when unemployment was high and there was a recession. Probably higher than today's stats. Also look at this.
ReplyDeletehttp://www.youtube.com/watch?v=0ftiITYwJkk&feature=youtube_gdata_player
For arguments sake,just because demand has increased during this economic crisis this doesn't mean its a inferior good, as despite the disturbing unemployment figures some people have actually gained employment so their real incomes have increased. I think that it's very important whilst studying economics not to make generalisations, because even though most people may refer to McDonald's as an inferior good some may refer to it as a normal good,as many people may regard their products as quite expensive compared to local alternatives such as Favourites and Morley's where similar meals can be purchased at more affordable prices and because they actually buy more as their income rises.
ReplyDeleteMcdonalds is a world wide fast food restaurant. People seem to think that only idiots work in Mcdonalds, but you'd be the idiot to think that. The restaurant itself is of higher quality now, and its an easy job to get. Its good value for money, and beats its substitutes by a long shot. I would even have te audacity to say the chips by themselves are better then every consuming product offered in KFC. By the 11% rise in revenue, I must be right. They've always kept their prices at an available rate, even for the poorer in society. Chips and a burger is only £2, and they're constantly advertising to catch the consumers eye and beat their rivals to attain victory in the fast-food industry, which they are easily doing. It even quotes that they are 'affordable treats' and you are now seeing middle and upper class families making their way to mcdonalds like its festive. The last paragraph claims price cuts, but they don't have sales at mcdonalds, its proffesional prices which the whole world knows about as soon as they walk into such a restaurant. They are simply catching the consumers eye through advertisement and affordable treats.
ReplyDelete(I HAVE AN ACCOUNT BUT I CANT SIGN ON FOR SOME REASON) - DapperMangan-Cliff - Ruairi
ReplyDeleteCOMMENT:
I agree, i think the rise is to do with people having less disposable income at this certain time and the fact there is still risky uncertainty within lots of economies around the world. The thing is McDonald's have so many little perks that attract their customers, and those customers are hard to categorize, because there is such a variety of customers. McDonald will always be a successful chain until they get caught out doing something wrong like blended up chicken in their milkshakes, it won't set them back, they will just promise not to do it again... and as it has been said, it is an affordable treat to the variety of different income earners, even those with lots of money buy McDonalds because it means they can spend that extra bit of saving on something else... McDonalds will always have customers because of its low prices and affordability... and frankly it tastes good for such a price...
RMC