Why liberals know nothing about business

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I Love America said:
Actually that is a great question and given their franchise model, I would say no. But since I don't the cost of every Big Mac in every market I can't tell you.

It is however irrelevant to my larger point which is that there isn't a lot of price elasticity of demand in a Big Mac.

If McDonalds could charge $.68 more per Big Mac and not see a decrease in demand they would do it. That would add $374,000,000 to their top line. They could offer to split 50% of it with the workers and it wouldn't matter.

McDonalds charges what it charges because that is what the market will bear.

Now some have said "but if McDonalds did this, it would be a boon feor business". There is zero proof of this. They also ignorantly claim "buf if every other fast food place did this, it would be a net wash". That would be collusion and run afoul of the gobblement.

I highly suggest a course in economics for my liberal friends
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I submit that unless you can answer questions like that, you cannot make the assumptions that you are making with any certainty. The business model that we are talking about is mature and very complex. While I understand the impulse to simplify things for a neat and tidy discussion, it is not the method that will lead you to a better understanding of the matter.

If it is proven that a Big Mac can be sold at the same price in a market with a 10 dollar minimum wage as it is in a market with an 8 dollar minimum wage, would the discussion become a little more complicated? If it were then proven that the cost to make that Big Mac was higher in the market with the 10 dollar minimum by about 7 cents, but the number of Big Macs sold per capita was higher by 10%, would you prefer to own the store in the place with the 10 dollar minimum or the 8 dollar minimum.
 
LOL at simplistic libs thinking that hourly wages are the only factor in Big Mac pricing.

How does McDonald’s come to its pricing decision?

McDonald’s pricing policy is highlighted in the company’s mission statement, where it states that the most fundamental element of determining price is:

Being in touch with the pricing of our competitors allows us to price our products correctly, balancing quality and value.

Therefore, it is possible to conclude that, by looking at competitors, McDonald’s can set the appropriate price for their products.


There is a rigorous pricing process that is used to determine the price for a particular market. The process, as described by Vignali et al. (1999), is listed below:

(1) selecting the price objective;
(2) determining demand;
(3) estimating costs;
(4) analyzing competitors’ costs, prices and offers;
(5) selecting a pricing method; and
(6) selecting a final price.


http://www.emeraldinsight.com/case_studies.htm/case_studies.htm?articleid=870577&show=html
 
LoneLaugher said:
I submit that unless you can answer questions like that, you cannot make the assumptions that you are making with any certainty. The business model that we are talking about is mature and very complex. While I understand the impulse to simplify things for a neat and tidy discussion, it is not the method that will lead you to a better understanding of the matter.

If it is proven that a Big Mac can be sold at the same price in a market with a 10 dollar minimum wage as it is in a market with an 8 dollar minimum wage, would the discussion become a little more complicated? If it were then proven that the cost to make that Big Mac was higher in the market with the 10 dollar minimum by about 7 cents, but the number of Big Macs sold per capita was higher by 10%, would you prefer to own the store in the place with the 10 dollar minimum or the 8 dollar minimum.
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Well then the same argument should be applied to those who started this whole discussion. Yes, I submit that there are regional differences in the price of a Big Mac and if you really want to get into the minutiae of the price of a Big Mac in every McDonalds that would yield a much accurate result. But the point I am trying to make (which you either aren't grasping or are being deliberately obtuse) is that if McDonalds could arbitrarily raise the price of their product, they would have done it.
 
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