introduction .

                                        Introduction

 Mcdonalds is a world renowned fast food industry. It was established by Ray Kroc ,on April 15 1955.The restaurant was first set up in Des Plaines,Illinois.The industry is spread worldwide.This food industry produces goods like : burgers ,fries ,milkshake,desert and chicken nuggets it is a form of normal goods for people in the city but for those in the outskirts it is a form of luxurious goods.It has a monopolistic behaviour.

                                     DEMAND AND SUPPLY:

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.