Why does Big Mac cost 5 dollars in the US while in other countries, it could go to less than 1 dollar?

Question

I mean, Big Mac in the US and in other countries has the same ingredients but why do the prices differ?

Sorry, it was in las Vegas....it could be cheaper in some other places.

Answer 1

To confirm, I've never seen a Big Mac cost anywhere near $5. But anyway, the cost is determined by cost of labor, economic productivity, and tax policies. That is why things cost different in different countries.

ALL costs are ultimately attributable to human labor. It's usually said labor, raw material, equipment, etc. But in truth it all goes to labor -- becuase the cost of supplies is based on the labor it took to provide them. After all you don't pay a cow ... you pay a cattle rancher to provide you the beef. The cost of taxation is also labor -- government labor.

The AMOUNT of labor required is determined by productivity and by tax rates. So really those are your three variables: cost of labor, amount of labor needed (productivity), and tax policy -- throughout the whole supply chain.

In a country where a burger is cheaper than in the US, it's because labor is cheaper, and maybe also because taxes are lower. (US usually is #1 in productivity so that won't explain it).

Places like Europe where Big Macs and everything else are more expensive, that's due to lower productivity and higher taxes.

Answer 2

Big Macs are "made" of lots of stuff - the ingredients obviously, but also the labor of the pleasant person who takes your order and the services of the machines etc. Also, each Big Mac has to help pay the rent.

The prices of all those inputs vary. Highly mobile inputs, like the ingredients, will not vary in price by much except because of things like tariffs and import restrictions. Less mobile or immobile inputs like labor and real estate can go for very different prices.

If McDonalds had to pay 7.00 an hour in LV for your order taker, it charges more (has to charge more) than in cheaper places where it pays less.

I bet haircuts are cheaper elsewhere as well.

Check out the "Big Mac Index" from the Economist magazine. Hamburgers make for some interesting analysis

Answer 3

lol.. no big mac costs a dollar. And actually you dont know what you're talking about. In some places, like Hawaii and Japan for instance hamburgers cost more because they dont have the room to raise large animals like cows, they raise smaller animals instead, and beef has to be imported largely. Also, in many many other countries they dont have the usda laws that say what kind of meat it has to be and how it has to be butchered and prepared. So, it might be called a Big Mac, but it is not neccessarily the same ingrediants as an american Big Mac.

Answer 4

IF you pick up a copy of The Economist, they do a Big Mac index, which compares the price of a Big Mac in other nations (in real terms).

While it isn't exact, this actually does work for a general trend when looking at exchange rates.

The remaining differences typically have to do with the price of inputs, i.e. labor, raw materials (food), overhead, etc.

Answer 5

A big mac does not cost no $5 dollars.

Answer 6

You can get the value meal here for $4.79 but for the most part it is labor, They pay mininuim wage of $515 an hour and other countries it could be a $1 or less an hour,

That is my thoughts.

Answer 7

They don't cost $5. They are around $3. Also, the ingredients are different in other countries...trust me, I've eaten one in London, NOT the same. And, it's actually around 3 pounds there, which is around $5.50 US dollars.

So, no, it's not the same nor is it cheaper in other countries.

Answer 8

because it depednds on the economy of the country. and ingredients bought in the US are pretty expensive and in other countries, it might not be as expensive. and for ex: in the philippines, if you sell a big mac for 5 bucks there no one would buy it cuz it would be the equivalent of 250 pesos.

Answer 9

Inflation...DUH in some counties people could not afford to pay the value of 5 American dollars for a burger...

Answer 10

The American currency is very expensive compared to other contries moneys. For example, take Chinese money. One Chinese dollar is eight American dollars. It really all depends on how different the currency is for each different country.