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ECONOMICS INTERNAL

ASSESSMENT
The Demand and Supply of products at Burger King
to supply the Meadowbrook community

Name: Sachin Simpson

School: Meadowbrook High School

Territory: Jamaica

Subject: Economics

Year: 2016-2017

Centre Number: 100075

Candidate Number:
Acknowledgement

It is in the researchers great interest to thank those who made the completion of this internal

assessment possible. Firstly, the researcher would like to thank God for giving providing the

strength, courage and motivation to carry out this assessment. I also thank the students of

Meadowbrook High School for their support and cooperation and also for finding the time to

answer the questionnaires given. The researcher would also like to thank his Economics teacher,

Miss Jones for her basis outline on the criteria of this assessment and her constant advice and

most importantly his family for their support and providing him with all the materials needed to

complete this exercise.

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Title of Study

The Demand and Supply of products at Burger King to supply the Meadowbrook community.

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Aims and Objectives

The aims of this research include:

Promote self-learning
To build research skills and gain a better understanding of the topics Demand and Supply.
Outline the demand for products from Burger King.
Explain how the rise and fall of prices affect consumers.
Explain how demand influences the supply of products at Burger King.
To examine the principal factors affecting the demand for product.

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Methods of Investigation

In this research both quantitative and qualitative research methods were used. Quantitative

research is the use of sampling techniques, such as surveys and questionnaires, to gather data that

can be represented numerically and mathematically manipulated to draw conclusions or make

generalization. The quantitative method used in this research was the use of a questionnaire.

Qualitative research is where data is obtained from individuals based on their opinions, for

example, interviews and focus groups. The qualitative method used in this research is the use of

an interview. In this research two data sources were used to collect the relevant data, and they are

Primary and Secondary data sources. Primary data source is where data is gathered for the

purpose of that particular research problem and Secondary data source is where previously used

data is gathered to be used in the current research. The primary sources utilized include:

Questionnaire- Twenty questionnaires were passed out to a number of students at

Meadowbrook High School over a period of three days, they were fully answered,

returned and analysed. The researcher chose to use questionnaires as quick means of

collecting relevant information. These questionnaires collected factual information that

describes the economic case of demand, recognise problems associated with demand as

well as to justify these practices. The questionnaire consisted of open ended questions

because this allowed the respondent to state anything they feel is relevant and wanted the

researcher to know as there are no limits as well as this encouraged more creative

answers and self-expression. Close ended questions were used as to not intimidate the

respondent or to exhaust them, these questions are less timely.


Test retest reliability- A measure of consistency for tests and other instruments. It assesses

the external consistency of a test. Individuals are asked to take the test of interest and

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then take the same test again at a later date. The scores are then compared. The closer the

scores are, the more reliable the test. Reliability is an important factor in testing because

if paves the way for accuracy. Remember, reliability refers to a test producing consistent

results, not necessarily valid results.


Case Studies- Case studies aim to analyse specific issues within the boundaries of a

specific environment, situation or organization. According to its design, case study

research method can be divided into three categories: explanatory, descriptive and

exploratory. Advantages of case study method include data collection and analysis within

the context of phenomenon, integration of qualitative and quantitative data in data

analysis, and the ability to capture complexities of real-life situations so that the

phenomenon can be studied in greater levels of depth. Case studies do have certain

disadvantages that may include lack of rigor, challenges associated with data analysis and

very little basis for generalizations of findings and conclusions.

The secondary sources utilized include:

Cape Text Books- Text books were capitalized to substantiate the different economic

theories about demand and supply.

Internet Internet research has had a profound impact on the way ideas are formed and

knowledge is created. One of the Internet advantages as research tool is that we can have

immediate access to a considerable amount of information with reference to a particular

topic. Search engines, for example, are able to retrieve in a few seconds a list of websites

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ranked according to their relevance to that particular subject. But relevance is practically

the only parameter considered by search engines. This means that selecting what

information is useful and which not can be time-consuming and often non-productive

without an attentive screening (Harris, 1997: 2).

Introduction

The predecessor to what is now the international fast food restaurant chain

Burger King was founded in 1953 in Jacksonville, Florida, as Insta-Burger

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King. Inspired by the McDonald brothers' original store location in San

Bernardino, California, the founders and owners, Keith J. Kramer and his

wife's uncle Matthew Burns, began searching for a concept. After purchasing

the rights to two pieces of equipment called "Insta" machines, the two

opened their first stores around a cooking device known as the Insta-Broiler.

The Insta-Broiler oven proved so successful at cooking burgers, they required

all of their franchises to carry the device. After the original company began

to falter in 1954, it was purchased by its Miami, Florida, franchisees James

McLamore and David R. Edgerton. The two initiated a corporate restructuring

of the chain; the first step being to rename the company Burger King. The

duo ran the company as an independent entity for eight years, eventually

expanding to over 250 locations in the United States, when they sold it to the

Pillsbury Company in 1967.

Economic Report

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Demand is the functional relationship between price and quantity. It is the amount of goods and

services a customer is willing and able to purchase at different prices over a period of time. The

law of demand states that the quantity demanded for a good or service rises as the price falls and

the quantity demanded for a good or services falls as price rises. The demand theory forms the

basis for the demand curve, which relates consumer desire to the amount of good available, as

more of a good or service is available, demand drops and therefore so does the equilibrium price.

There are namely two types of demand in economics, desired demand and effective demand.

Desired demand is an expressed preference for having a particular good and service.

Effective demand is a desired demand that is backed by the capability to acquire the good or

service, that is, effective demand refers to the willingness and the ability to pay for the

commodity.

Factors affecting demand at Burger King:

There are two main factors that affect demand, namely:

a) Price factor (Price of the product)

b) Non-Price factors such as consumers income, preferences, related products (substitutes and

complements) and expectations.

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``

1. Price- A change in the price of products gives rise to the law of demand which states that as

price the price decreases, the quantity demanded increases which causes a downward movement

along the demand curve. As price increases, quantity demanded decreases and there is an upward

movement along the demand curve. Members would purchase more of the product when the

price decreases but less as it increases. The price increase would cause Burger King to be in

disequilibrium as persons will automatically begin to purchase less.

2. Consumer Income- An increase in consumer income will lead to an increase in demand for

Burger Kings product and this will cause an outward shift on the demand curve, while a

decrease in consumer income will lead to decrease in demand for their products which will cause

an inward shift on the demand curve.

3. Expectation- Consumers expectation may vary, therefore, if a consumer expects the price of a

product to increase, the demand for the Burger Kings product may decrease and the demand

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curve my shift inward to the left, while if it is expected that the price of a product will decrease,

the demand will increase causing the demand curve to shift outward to the right.

4. Related products- If two products are substitutes and there is an increase in the price of one,

the demand for the other will increase, causing the demand curve for that product to shift to the

right. If two products are complement, a decrease in the price of one product will lead to an

increase in quantity demanded for that product and the demand for its complement will also

increase.

Supply is the functional relationship between price and quantity. It is the amount of goods and

services that firms/producers are willing and able to produce and sell at different prices over a

period of time. The Law of Supply states that as the price of good or service increases the

quantity demanded increases and as the price of good or service decreases the quantity supplied

decreases.

Factors affecting supply at Burger King:

There are two main factors that affect supply, namely:

a) Price factor (Price of the product)

b) Non-Price factors such as natural disaster, nature of the product, taxes and subsidies,

expectation, other goods, technology and factor of production.

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1. Prices of alternative goods: when the prices of alternative good (alternative goods are

meat and milk, for instance, as both goods can be produced by the same resources, i.e.

cows, land, the same type of capital) increases, producers find it very profitable to

increase its production and the supply increases. If Burger King was to increase their

prices demand would decrease as members of the community would buy the alternative

goods from other restaurants.


2. Technology: when there is a technological progress in the production methods, producers

become more productive and can produce more under the same quantity of factors, as a

result the supply increases and so there would be room for improvement in Burger Kings

products.
3. Number of producers: when the number of producers increases, there are more suppliers

in the market and the supply increases, this would be a disadvantage for Burger King as

there would be substitutes for the members of the community to purchase from.

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4. Producers` future expectations: when producers expect higher prices in the future, they

may increase their production to earn higher profits in the future and as a result the

supply increases (naturally, they could also cut down production in order to wait higher

prices in the future, in this case the supply decreases).

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The basic insight underlying the law of supply and demand is that at any given moment a price

that is too high will leave disappointed would-be sellers with unsold goods, while a price that

is too low will leave disappointed would-be buyers without the goods they wish to buy. There

exists a right price, at which all those who wish to buy can find sellers willing to sell and all

those who wish to sell can find buyers willing to buy. This right price is therefore often called

the market-clearing price.

Supply-and-demand theory revolves around the proposition that a free, competitive market does

in fact successfully generate a powerful tendency toward the market-clearing price. This

proposition is often seen as the most important implication of (and premise for) Adam Smiths

famed invisible hand. Without any conscious managing control, a market spontaneously

generates a tendency toward the dovetailing of independently made decisions of buyers and

sellers to ensure that each of their decisions fits with the decisions made by the other market

participants. Were this tendency to be carried to the limit, no buyer (seller) would be misled so as

to waste time attempting to buy (sell) at a price below (above) the market-clearing price. No

buyer (seller) would in fact pay (receive) a price higher (lower) than necessary to elicit the

agreement of his trading partner. To the extent that this proposition is valid, free competitive

markets achieve what F. A. Hayek has justifiably called a marvel. But it is in regard to the

validity of this proposition (and in particular to our reasons for being convinced that this

proposition is both valid and relevant) that Austrians differ sharply with mainstream textbook

economics. And it is precisely because of the universally acknowledged centrality of the supply-

and- demand proposition for all of economics that this disagreement is so important.

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Presentation of Data

Question 1: All age groups enjoy burgers. 80% of the respondents were in the age range of 15-
17.

Age of Respondents

Table 1
(11-14) 2
(15-17) 18

Figure 1

Age Of Respondents

10%

(11-14)
(15-17)

90%

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Question 2:All students ate burgers at least once per year. 45% of the students eat burgers
weekly.

Students Eating Burgers

Table 2
Daily 4
Weekly 9
Monthly 6
Yearly 1
Never 0

Figure 2

# of Students and how often they eat burgers


10
9
8
7
6
5
9
4
3 6
2 4
1
1
0 0
Daily Weekly Monthly Yearly Never

# of Students and how often they eat burgers

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Question 3: 60% of the students prefer Burger King while 40% prefer other.

Number of Students who prefer

Table 3
Burger King 12
Other 8

Figure 3

# Number of Students and Preffered choice of burger

Burger King
8
Other

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Questions 4 and 5: Location is the main factor that affects the choice of the students source of
burgers.

Effects of each factor on choice of burger source

Table 4

Factors Affecting Demand No. Of Students


Price 9
Taste/Fashion 14
Advertising 10
Location 16
Number of Outlets 7
Special Offers/ Discount 4

Figure 4

Factors Affecting Demand for Burger


0

Special Offers/ Discounts 4

Number of Outlets 7
# of students
Location 16

Advertising 14

Taste/ Fashion 14

Price 9

0 2 4 6 8 10 12 14 16 18

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Question 6:55% of the students would buy the same amount of burgers, even if there was an
increase in price of 10%, while 4% of the students would buy less burger.

With an increase in price, number of students who buy:

Table 6
Buy less burger 9
Buy more burger 0
Buy the same amount of burgers 11

Figure 6

# of students and how much burger they would buy

Buy less burger


Buy more burger
8
Buy the same amount of
11 burger

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Question 7: Even if the price of the students source of burger undergoes an increase in price 60%
of them would still remain loyal and 40% would have switched to the nearest substitute or do
without burgers.

Loyalty to source of burger

Table 7
# of students who continue buying from preferred source 12
# of students who would switch source 8

Figure 7

Loyalty to Source

No. of Loyal customers


8 No. of students who
switch source
12

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Question 8: It can be concluded that the quality of the burgers has not been the same as they
were before the increase in price.

Quality of Burgers after Increased price

Table 8
Better 0
Worst 15
The same 5

Figure 8

Quality of the Burger


16

14

12

10

0
Better
0 W15
orst The same
5

Quality of the Burger

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Question 9: 40% of the respondents suggested healthier forms of burgers such as organic burgers
while another 40% of the respondents suggested that the firms use less oil in the production of
burgers.

Table 9

Suggestions # of Respondents
Less Oil 8
Healthier Burgers 8
No problem 4

Figure 9

Suggestions to Improve Quality


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10

No. of Respondents
6

0
Less Oil Healtier Bugers (Organic) No problem

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Interpretation and Analysis

The fast food industry of Jamaica is one of a monopolistic competition market structure. Some

examples of firms in this industry include KFC, Wendys, Kabs, Burger King etc. In this industry

the products offered are homogenous but there are differentiated by means of branding. For

example all firms in the burger industry sells burgers of course but they all have different ways in

preparing and distributing (in this case wrapping) their products. The nature of this market

structure is shown by brand loyalty. Even if the price of the students source of burger undergoes

an increase in price 60% of them would still remain loyal to their original source while 40%

would have switched to the nearest substitute or do without burgers

From the data collected it was found that 90% of the age respondents were in the age range of

(15-17) while the other 10% was in the age range of (11-14)

From the data collected all students eat burgers. Of the 20 students 4 of them eat burgers daily, 6

have it monthly and 1 person has it yearly because that person is a critical spender. In average

burgers are mainly bought weekly as stated by 45% of the recipients.

There are many factors that affect the demand of a good or service. This includes a change in

price, Income, Quality, Taste or fashion etc. In this investigation of the range of factor affecting

the demand of the students choice of burgers Location is key as all 20 students stated this. Of the

20 students 80% of them ranked Location to b their number one aspect. This is so because of the

closeness of Burger King from the school compound making it easy for them to reach. Taste is

also an important aspect which was expected as burger falls under the food industry and people

wont buy food that they dont like.

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60% of the respondents preferred Burger King to be their main source of burgers while 40% of

the students preferred other restaurants but because of the location.

The quality of all burgers in the industry has not been the same. It can be conclude that the

quality has is worst. This is because the increase in price as a supplier they will seek to produce

more because of this will get them more money intern they may start doing batch production.

This is a disadvantage because less dedication is placed in the production.

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Findings

As the Laws of demand suggest as the price of the good (the burger) increases the opposite

happens to the quantity demanded as it instead decreases and vice versa.

The main factors affecting demand for burgers and its consumption rate are taste and location.

Price and advertising are also important factors.

Burger King is in a better financial position than Burger King because of their marketing

strategy. Burger King is a franchise so its name it already widespread recognised giving it an

increased chance of being successful hence, they have a larger consumer market.

The researcher saw that both the law of demand and supply were used. The case of the law of

demand is where the researcher asked if there was an increase in all prices what would the

consumers do and most of them answered saying they would purchase less but if there was a

10% decrease they would purchase more. This portrays the law of demand as prices increase

demands go downs and as prices decreases demands go up. Some loyal customers that depend on

Burger King stated that even if there is a price increase they would buy the same quantity as they

normally do. The factors that influenced most of the customers to shop at Burger King are the

affordable prices and the quality of the goods being sold. Burger King is one of many food

suppliers in the Meadowbrook community but persons in the community depend on them to

provide affordable and quality products.

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Recommendations and Judgements

After much investigation and analysis of the data collected, Burger King has room for

improvements in some areas if they have not already done so to boost their sales as their

products are in high demand.

Burger King should seek to improve their advertisement skills as this is a key in

increasing the demand of their products.


It is advised that burger king seek to deliver to Meadowbrook High School.
Instalments of suggestion box to get customers feedback so that they can keep up with

the latest trends and have an idea if they are on the right track as The customer is always

right.
Offers of more special gifts such as giveaways, combos, etc.
The suggestion of increasing the quality of goods produced and improving their services

to correspond with the increasing of the prices as this may attract more customers.
Introduce new healthier products such as vegan and organic burgers which will include

lettuce instead of buns


It is advised that students or consumers in general should think about the health and

disease awareness and seek to demand less burgers as it is not good for them
To improve the quality of the burgers the consumers recommend that they use less oil to

make the food much healthier for them as well as to make the environment much cleaner.

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Bibliography

Books:

Hosein, R., &Gookool, R. (2006). CAPE Economics for self-study and distance learning

Unit 1. 27 Bath Road, CHELTENHAM GL53 United Kingdom. Nelson Thornes Ltd.
Sloman, J. (2006). Economics. Edinburgh Gate, Harlow, Essex CM20. Pearson Education

Limited.

Websites:

http://www.investopedia.com/university/economics/economics3.asp
http://www.econport.org/content/handbook/Demand/Factors.html

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