Intro: What is “trade-offs”? What is price inelastic, and how does it affect the market? What is considered as the substitution effect? These questions include the concept of business systems, and economic ideas, which are the keys to understanding the economy market, and the economy is in our daily life. Cases down below are the real world example of some key economic concept that is very important to understand.
Case in Point 1: McDonald’s “Made for You”
- To replace Chapter two article, Cadillac Reportedly to Build Chevy Volt- Based Car, on page 60
Business systems have limitations. Companies that focus on details often have to give up the speed of production. These situations demonstrate tradeoffs, the exemptions a company …show more content…
Consumers make their choices based on price and convenience. In the last century, McDonalds used tradeoffs to help them be the leader of the fast food industry. Because customers love McDonalds for their fast speed and consistency, the whole company’s operating system was aimed towards these two goals. However, McDonalds competes with more and more new fast food companies like, Wendy 's, Taco Bell, and KFC. McDonalds started to look for ways to improve their own system.
When Burger King created their new slogan, “Have it your way," McDonalds copied their idea by using a similar slogan called "Made for You". McDonalds spent over half a billion dollars on kitchen renovations to built buffet counters in order to keep up with Burger King and serve a larger customer base. However, in McDonalds sale reports the results showed that the new McDonalds strategy did not work very well and also cost the company’s reputation of fast speed and consistency. Graph 1 shows the difference between McDonald’s average sales before and after using the new …show more content…
With all other competes smartphone products and the price for Apple iPhone rises to the point that it cost more than it actually worth, many consumers will continue to buy them just because of the name of the company. But on the other hand, if it is a less well-known brand, the market demand would be more price elasticity. One other factor is income, which also directly affects elastically, changes in income cause bigger changes in demand. If the country’s overall income (GDP) goes up, and consumers will general spend more on the luxury good.
Case in Point 3: Cola v.s Cola
- To replace Chapter six article, Price Elasticity, Cross-Price Elasticity and Income Elasticity in the market for Alcoholic Beverages, on page 187
The substitution effect is a key to the price elasticity of demand, which measures the relationship of demand and changes in price in the market. And price elastic is one of the possible outcomes that will happen, and it means some products change in prices can cause greater changes in
Case in Point 1: McDonald’s “Made for You”
- To replace Chapter two article, Cadillac Reportedly to Build Chevy Volt- Based Car, on page 60
Business systems have limitations. Companies that focus on details often have to give up the speed of production. These situations demonstrate tradeoffs, the exemptions a company …show more content…
Consumers make their choices based on price and convenience. In the last century, McDonalds used tradeoffs to help them be the leader of the fast food industry. Because customers love McDonalds for their fast speed and consistency, the whole company’s operating system was aimed towards these two goals. However, McDonalds competes with more and more new fast food companies like, Wendy 's, Taco Bell, and KFC. McDonalds started to look for ways to improve their own system.
When Burger King created their new slogan, “Have it your way," McDonalds copied their idea by using a similar slogan called "Made for You". McDonalds spent over half a billion dollars on kitchen renovations to built buffet counters in order to keep up with Burger King and serve a larger customer base. However, in McDonalds sale reports the results showed that the new McDonalds strategy did not work very well and also cost the company’s reputation of fast speed and consistency. Graph 1 shows the difference between McDonald’s average sales before and after using the new …show more content…
With all other competes smartphone products and the price for Apple iPhone rises to the point that it cost more than it actually worth, many consumers will continue to buy them just because of the name of the company. But on the other hand, if it is a less well-known brand, the market demand would be more price elasticity. One other factor is income, which also directly affects elastically, changes in income cause bigger changes in demand. If the country’s overall income (GDP) goes up, and consumers will general spend more on the luxury good.
Case in Point 3: Cola v.s Cola
- To replace Chapter six article, Price Elasticity, Cross-Price Elasticity and Income Elasticity in the market for Alcoholic Beverages, on page 187
The substitution effect is a key to the price elasticity of demand, which measures the relationship of demand and changes in price in the market. And price elastic is one of the possible outcomes that will happen, and it means some products change in prices can cause greater changes in