McDonalds - Mc Donalds In this research we have chosed McDonalds as a company and we will be explaining microeconomics aspect of this company We

McDonalds - Mc Donalds In this research we have chosed...

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Mc DonaldsIn this research, we have chosed McDonald’s as a company and we will beexplaining microeconomics aspect of this company.We will basically cover four major concepts including monopolistic competition,barriers to entry, law of demand, and elasticity.
Monopolistic competition is a market structure in which consists of large numberof firms but it is not as large as perfect competition. Eacinh firm produces adifferentiated product which is more or less the same. Usually, they compete onproduct quality, price, and marketing. In barriers to entry,firms can enter and exitthe industry easily. They will stay in the industry when they earn supernormalprofit and leave when they earn normal profit. (Michael Parkin, 2013) McDonald’scan be categorized under monopolistic competition. It has a large number of firmsto compete with in fast food industry such as Kentucky Fried Chicken, Burger King,Wendy’s and more. In this market structure, each firm supplies only a smallmarket share and has limited power to influence the price of itsproduct. Companies attempt to differentiate their product from other firms.Example, McDonald’s are well known for its burger whereas KFC is well known forPage 1Page 2Page 3Page4
its fried chicken. McDonald’s invests money in maintaining its brand name, whichdifferentiates it from other companies. McDonald’s usually spends huge amountof money each year on lawful security of its product name, thereby avoiding anyillegal use of it. (mcdonalds.co.uk, 2008) As the firms compete on product quality,price and marketing strategy but in this case, McDonald’s will compare on productattributes, packaging, price control, services, location, and brand name. Ineconomics, barriers to entry is a natural or legal restriction that defends acompany from potential opponents. In this market structure, it has no barriers toblock any new competitors from entering the industry in the long run. (MichaelParkin, 2012) The firms are free to enter or quit the industry as they wanted.

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