Was in Prague at the weekend and noticed that McDoanalds are less that half the price they are here in the UK. Ok, there is a difference in the value of the currency, so why can't someone take advantage of that to bring me a cheap burger? Or more precisely, why are McDonalds charging me so much over here when they can clearly produce the food at a much lower price?
Do you think the factors of production in Prague and in the UK are the same?
I don't know if a McDonald's burger would stay fresh traveling from Prague to the UK.
As for why... the British like McDs (or fast food in general) more than Czechs? Higher demand, higher price.
"Do you think the factors of production in Prague and in the US are the same?"
I'm in the UK not the US. But the answer is no. The factors of production are probably not the same. Yet the Czech Republic are in the EU so I wouldn't have thought it would be too hard to get the goods produced there and shipped here. Maybe the extra cost is in wages to McDonalds workers, I dunno.
"...the British like McDs (or fast food in general) more than Czechs? Higher demand, higher price."
Couldn't tell you the answer to that one I'm afraid. There seemed a Mcdonalds on every other street in Prague, so no different from the UK. They all seemed fairly packed with customers but I don't know the actual sales figures in that country though so all I have is my perception of one weekend spent there.
Daver_Chappell:I'm in the UK not the US. But the answer is no. The factors of production are probably not the same. Yet the Czech Republic are in the EU so I wouldn't have thought it would be too hard to get the goods produced there and shipped here. Maybe the extra cost is in wages to McDonalds workers, I dunno.
Different regulatory burden, different competition for laborers or wage controls (so different wages), building construction standards, supply/demand, total costs for raw materials, taxes (maybe; not sure in the EU), etc., etc.....heck I'd be surprised if they did cost the same.
Dave,
You say that there is a McDs on every street and they are all packed, the same as the UK, but that doesn't mean the demand is the same! All it means is that in both countries the company is correctly priced, ie that the market clears and demand meets supply. If prices were as high in Prague as in the UK the quantity demanded would be considerably less and the restaurants would be empty and branches closing.
Where in the UK do you live? London has insane food prices.
You have to remember that GDP per capita in the Czech Republic is less than half of the UK's GDP per capita. Though it's far from a perfect measure, it indicates that Czechs have lower incomes than Brits. So leaving all possible regulatory differences aside, the demand for McD's is lower in the Czech Republic, and McD workers are paid less in the Czech Republic (due to a lower demand for labor). As a consequence, McD is cheaper in the Czech Republic than it is in the UK.
Political Atheists Blog