There are many wheat farmers in the world, and there are also many McDonald's restaurants in the world. Why, then, does a McDonald's restaurant face a downward-sloping demand curve while a wheat farmer faces a horizontal demand curve?

What will be an ideal response?


Wheat framers are selling identical goods, but fast food restaurants do not sell identical goods. If a wheat farmer raises his price above the market price, he will lose all of his buyers. A McDonald's restaurant can raise its price without losing all of its buyers because it is selling a product that is not identical to the products sold by other restaurants.

Economics

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