Demand and Supply

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3. Demand and Price Elasticity It is important to understand how price changes affect the demand of fast food especially for firm like McDonald that operates in a Monopolistic Market. When McDonalds offers its discounted Value Meal during lunch and dinner hours, the demand for McDonald’s products will increase. According to the law of demand, other things equal, the quantity demanded of a goods increases when the price of the good falls. (N.Geogory Mankiw et al.,2013). A change in price will affect the movement along the demand curve. Hence, when there is a reduction in McDonald products price, there will be a downward movement along the demand curve. Graph 3.1 shows the inverse relationship between prices…show more content…
When McDonalds reduces it products price relative to its competitors, the quantity demanded for McDonald products will raise and the total revenue will increase. Hence, pricing is the major concern for buyer in making purchase decision, if one becomes much cheaper than the others, the majority of the buyer will switch despite of their personal preferences. Besides the availability of substitutes, the demand for fast food products is also affected by its convenience in reaching for its. Buyers are seeking more convenience services offered by foodservice providers nowadays. By expanding its area of delivery services, McDonald value shares among burger fast food has increase to almost 84% in 2010. (Mohd Zulkeflee Adb Razak & Azleen Ilias, 2013) More demands are expected for McDonald delivery service as there is no minimum purchase requirement for home delivery. Apart from delivery services, McDonald provides the convenience to its buyer by having more drive-thru outlets knowing that Malaysians are becoming increasingly time poor due to heavier work load and hectic social lifestyle. By capitalizing on buyer needs, there is potential for creating more demand for McDonald products. According to Sarah Casanova, McDonald’s Malaysia managing director, McDonald is aiming to double the number of restaurants it has in Malaysia to 500 by 2020. McDonald’s Malaysia recorded its higher market

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