Re:When McDonalds Came to Denmark
by cycomanic on Tuesday September 21, 2021 @06:14PM
(#28610675)
Economics 101btells us that the price of the burger has nothing to do with the cost of it, and still this argument is brought up again and again. Interestingly typically from the people who are present themselves as very business savy.
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Are you being sarcastic? The food industry is generally used as the textbook example for the market most resembling perfect competition which as defined straight from wikipedia: "Such markets are allocatively efficient, as output will always occur where marginal cost is equal to average revenue i.e. price (MC = AR). In perfect competition, any profit-maximizing producer faces a market price equal to its marginal cost (P = MC)".
The restaurant industry certainly is not a market resembling perfect competition, I mean we can just look at the vastly varying prices between restaurants, which certainly can't be attributed to cost. Even if we talk about the food industry more generally, I mean there's like 3 or 4 different brands of milk in my supermarket which vary in price by 100% I hardly doubt that their cost varies by that much.