IntroductionThe company chosen for this paper is McDonald?s Corporation (McDonald?s) and the mathematical product under consideration is the largish mackintosh? sandwich. The discussion lead focus on how McDonald?s can meet their design to outgrowth company revenue using the economic design of ?Price catch of Demand? to get in wind whether to increase or decrease the price. Next, consideration is placed on how the concept of ?Income Elasticity of Demand? can be used to predict how the admit for the product would modification with regard to a change in income of the customers. Finally, a presentation of the results of our research in the MarketLine Business learning Center database at the University of Phoenix Library allow for be provided.
Price Elasticity of DemandPrice changes affect the way consumers live on a daily basis. Adjusting a budget to stay inside our means is pivotal as prices of elastic and inelastic goods change daily. ?The responsiveness (or sensitivity) of consumers to a price change is measured by a products price elasticity of demand.? (Brue & McConnel, 2004 p.356).
McDonalds is looking to increase their revenue by changing the price on bingle of its most memorable and successful products, the Big mac.
The objective is to determine if a change of the price for a Big Mac can be made that leave alone increase make sense revenue for the company. Price elasticity of demand data will be used to construct a demand incline and a total revenue curve. From these data the company will compare the current price of a Big Mac and determine if the price can be raised or lowered such that the total revenue of the company is increased.
For example, advert the demand curve and total revenue curve below in (Figure 1).
Figure 1The current price of a Big Mac sandwich is set at $2.27. The...
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