Supply And Demand
In the business world, business owners are all concerned with supply and demand. From the large hamburger franchise to the local burger joint down the street, supply and demand effects everyone. Of course, supply and demand are affected by many different factors. In order to adequately show you how some factors affect both supply and demand, let's start off by picking a business to use for an example. I'll use the popular hamburger franchise, McDonald's, in my example.
There are many different factors that shift the supply of a business, even a large franchise like McDonald's. They can vary from the amount of suppliers in the area to the changes in resource prices. While it may not seem ...view middle of the document...
In the same aspect, McDonald's prices might be higher due to the changes in prices for their resources. As the consumer, it may seem silly for McDonald's to raise their prices when the price of cheese from their supplier goes up. In the same respect, if they don't, they will be reducing their profits and making it less desirable to keep that product in supply for the consumer.
Just as supply is affected by specific factors, so is demand. Those factors vary from a change in the population to a more recent factor for many, change in income levels. Depending on where McDonald's is located will certainly affect the demand for their product. In a large city, the demand is much higher than of that same McDonald's located in a small vacation town. The demand in the small vacation town does vary greatly though, depending on the time of year. The demand in the summer may be 3 times higher than the demand in the winter, just due to that location of the establishment. Just like with supply, income levels does affect demand. If a family goes from a 2 income household down to 1, a budget will have to be set in order to continue to meet their financial needs. Normally the budget is cut on frivolous things, such as eating out, thus; one less family will be dining at that establishment.
As you can see, while you may not think that small changes in the economy or rising costs may play a large role in the supply and demand chain, they effect it more than you may realize. Next time you go out to McDonald's or another large franchise, think about how these examples are affecting the business.