McDonald’s again

Yes, it is McDonald’s again. The photo shows a unique product in the Middle East, McArabia. It served with lettuce, tomatoes, onions, and garlic mayonnaise in addition to two small patties of grilled chicken, all wrapped in an Arabic style pita bread.

It is a popular Arabic-themed sandwich available at all McDonald's outlets throughout the Middle East, and is especially popular in the United Arab Emirates. It really tastes good. Don’t miss it!

In Hong Kong, it was reported that different restaurants charge different prices for the same food. So I asked Form Six students to conduct a mini survey on the price of Big Mac all over Hong Kong. It is found that in most districts, a Big Mac costs HKD 15.1. A remarkable phenomenon is found: a Big Mac costs HKD 15.1 in the Bonham Road restaurant but costs only HKD 14.6 in Hill Road restaurant. Is it a price discrimination? What causes the price differential? Do you think this situation will last?

In Dubai, the price of Big Mac is AED 14 (about HKD 30.24). It is a double of in Hong Kong! According to statistics of the Big Mac Index, the Big Mac of in Hong Kong is one of the cheapest priced worldwide. In economics, the law of one price predicts that people may buy the Big Mac in Hong Kong at a lower price and resell it in Dubai at a higher price and earn a profit of HKD 15.14. Thus, theoretically, competition and arbitrage would guarantee the price of Big Mac is the same all over the world. Do you think it works in reality? Why?