Finding & Analysis

A. The data research shows that maximum quantity of demanded is 22 units while the price of the product is RM10. Slowly, the quantity demanded from 22 units drops to 3 units because the price of the product rises from RM10 to RM40. Lastly, the quantity demanded drop to the minimum 2 units while the price is RM50. The result expresses the law of the demand- demand fallen by following the increasing of price.

  

The factors of consumers choosing our product include convenient, time saving, healthy, tasty and others such as nearby residential area and temptation of advertisement. Majority of the customer prefer McDonald due to their preferences and likings to McDonald's taste and style. Out of fifteen, ten of them prefer McDonald because of taste, nine of them prefer because of convenient, 8 of them prefer because of time saving and even one of the customers prefers because of healthy. One customer feels that it is a good suggestion to have meal at McDonald as it comes with set. As a fast food, McDonald is convenient and it saves a lot of time comparing with the other type of meal. Lastly, there are only two customer are affected the other factors which is temptation of advertisements and distance between the housing area and restaurants.

Most of the customers have meal at McDonald once a month because they find that is unhealthy to have fast food in long period even though it is convenient and delicious. Nonetheless, there are still some customers unaware of health, taking food at McDonald twice a week or even once a week. Hence, different customers have different habit causes the various responses from consumers. Four Customer who have McDonald twice a week and once a week, the maximum we found that 6 customer have McDonald once a month.

B. Law of Demand

The law of the demand states that there is an inverse relationship between quantity demanded of any good and the price charged. Obviously, based on the demand curve and data obtained, consumers demand the product at low price; the lower the price, the higher the quantity demanded. Ceteris Paribus explains the situation when the quantity of demanded changed by the price of the product itself. (McConnell, Brue and Flynn, 2012).

Simultaneously, the factors other than the price of the product itself, will affect the quantity demand. Quantity demanded is moving along the curve when the quantity demanded is increased by the price of the product itself. The demand curve will shift along to the right while the quantity demand increased by the other factors. Price Theory shows the ability and willingness of consumer to purchase the product at the current market price. Satisfaction or utility are gained on the consumption goods but consumers would not obtain all of the satisfaction due to limitation of consumers' salaries. (McConnell, Brue and Flynn, 2012).

The graph below shows the quantity of demand decreases to 5 units when the price of product itself is RM 50 while quantity of demand increases to 25 units when the price of product itself is RM 10.

Factors of demand

Demand of a product or service is affected by various factors such as the level of income, the presence of substitute and complement goods and consumer preferences.

The income level of consumers will affect the demand for a product. When the level of income increases, ceteris paribus, the demand increases. When the level of income decreases, the demand will also decreases. In example, when a boy receives RM6 from his parents as allowance, he buys 1 Filet-O-Fish burger which costs Rm6 but when his allowance is RM 12, he can buy two Filet-O-Fish burgers which cost Rm12. Thus, the demand for Filet-O-Fish burger increases.

Other than that, when a good or service is replaceable with its substitutes, the price increase in one product, ceteris paribus, will cause the increase the demand for the other. For example, many consumers would prefer McDonald over Carl’s Junior due to the price for Carl’s Junior is very high. Therefore, the demand for McDonald increases. In addition, when a good or service is complement to the other, when the price on one product falls, the demand for the complement product increases. For example, if the price of McValue meal of Filet-O-Fish decreases, the demand of the complement product which is fries and coke will increase as well. McValue meal comes with burger, fries and coke. Therefore, the demand of the complement product increases.

Furthermore, consumer preference also affects the demand for a product. Consumers will change their preference to healthier food such as salad when Malaysia is doing campaign ‘Eat Less Fast Food’ to improve their health condition and to promote the consumption of healthy food. Thus, the demand for McDonald will decrease.

 

 

  

Factors of Elasticity

 

Demand elasticity is the change of quantity demanded to the change of the price of the product. It measures the responsiveness of consumer when the price of the product changed. (McConnell, Brue and Flynn, 2012).

Types of goods: luxuries vs necessities

Luxuries goods are elastic while necessities goods are inelastic. (Jackson, McIver and Bajada). Luxuries good is set at higher price than necessities goods is cheaper. Luxuries goods are elastic because it has limitation whereas necessities has no limitation. McDonald is considered as luxuries goods in Malaysia and is more expensive because it is situated in restaurant only and therefore is more elastic. Unlike Ramli burger, everyone can get it at any hawker stall. Besides that, necessities goods like rice is cheaper than McDonald because rice is sold everywhere

Substitute -

Substitute are products that have same function and are able to substitute each other. The more the substitute of products, the more elastic the demand is. (Jackson, McIver and Bajada). McDonald has many substitute products and therefore it is very elastic. McDonald substitute products like KFC can affect the demand of McDonald. For instance, KFC is having promotion on zinger burger while the price of McDonald’s burger remains unchanged. Customer would most likely go for KFC because it is cheaper than McDonald.

Habits -

Habit is something that people used to do it every day and it is very difficult to change it. Sometimes, people do not realize that they are doing the habits. For example, McDonald’s customer will not possibly change their demand in a short period of time because they are used to eating McDonald. Regardless of the price increases or reduce, some people will still eat McDonald as it has become a habit for them to eat.

Time period-

The demand is more elastic when consumer takes a long time to think about purchasing the goods. (Jackson, McIver and Bajada). For instance, when the price of McDonald increases, customers will need time to think how worth is the price and the level of satisfaction. Therefore, they need to compare the price of McDonald with their competitors like Burger King. Customer might change their preferences to Burger King if the price is lower than McDonald while some might still stick with McDonald probably because McDonald taste is more preferable among the customers.

Price of goods itself-

McDonald price is also the factors of price elasticity of demand. If McDonald decreases the price of the burger, the demand will also increase because customer seek cheaper goods more and the demand will decrease when price increases.

Level of income- 

The demand of the products are inelastic when income increases. This is because the ability of customer to purchase the products remain the same or even increases as income increases. Similarly, the demand of products are elastic when income decreases. Customer of McDonald Burger might switch to Ramli Burger because they are unable to consume at McDonald when the income fell.