Cheap meals reduce demand?

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https://www.newsnationnow.com/entertainment-news/food/mcdonalds-french-fries-production/

I am having a hard time wrapping my head around why affordable fast food options mean reduced demand for fries?

Wouldn’t the inverse be true?

In: Economics

7 Answers

Anonymous 0 Comments

Your instinct boils down to an erroneous assumption.

Fake numbers but real point – you’re assuming the new meal has *half* as many fries but generates *twice* as many sales. In that math, the overall amount of fry demand is the same. If the new meals have half as many fries but generate *three* times as many sales, then yes net fry sales have gone up. I think this is your gut instinct that lower prices have increased sales at a rate that overpowers the fewer-fries-per-sale reduction.

The reality is more like the new meal has half as many fries but sales are flat. Thus the amount of fries being sold has been cut in half as well.

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