Supply and Demand

Supply & Demand Analysis: Fast Food Industry

Determinants of Demand

The Determinants of Demand are variables that affect the overall demand of a market. In the text, there are 5 variables that are discussed. These include tastes, income, other goods, expectations, and buyers. These variables help define how the market will react to certain economic situations (Schiller, 2010). In this case, the economic factors and how they affect the fast food industry will be examined.

The first determinant for market demand is the overall desire for the product or service. In today’s society there is plenty of desire for fast food. The desire for fast food is due to the fact that it is cheap, easy to obtain, and convenient for a society that is on the go. Therefore, it is easy to see that there is great appetite for the fast food industry as consumers demand meals away from home and the products and services that the fast food industry provides (Schlosser, 2001).

The second determinate is income. Because of the affordability of fast food, the demand for fast food is apparent at all income levels. Higher income levels turn to the fast food establishments due to their convenience while on the go, while lower income are drawn to fast food establishments for their affordability of their product (Bowman & Vinyard, 2011).

Other goods is the third determinate of demand. This determinate can be classified in two types. The first type is a substitute good and the second type is a complimentary good. In analyzing the fast food industry, when a sit down restaurant lowers their price, this will cause a shift in demand away from fast food restaurants to sit down restaurants. This is referred to as a substitute good. In the fast food industry an example of a complimentary good is the cost of gas. As the cost of gas increases, consumers may choose to eat at home rather than go to a fast food restaurant to eat. This is due to fewer resources available to them due to the...