Coca-Cola, Microeconomics

COCA-COLA
INTRODUCTION:
The Coca-Cola Company, American Corporation was
founded in the year 1892. Coca-Cola is the carbonated Soft
drink manufactured by The Coca-Cola Company.
COMPETITORS:
1. Pepsi
2. Red Bull
3. thums up
4. Monster
DEMAND ANALYSIS
LAW OF DEMAND:
Represents the inverse relation between the quantity demanded of a good and its price.
DEMAND CURVE:
When the product price increases, the
demand of the product decreases and
vice-versa.
SHIFT IN DEMAND CURVE:
Demand of Coca-Cola increases, the demand curve shifts to rightwards, So, people will
shift to Coca-Cola than local drinks. When demand of Coca-Cola decreases, the demand
curve shifts to leftwards, So, people will shift to other drinks than Coca-Cola.
FACTORS AFFECTING DEMAND
1.PRICE OF RELATED GOODS

• Substitute.
• Complement.
2.INCOME OF THE CONSUMERS

• Normal Good
• Inferior Good
Coca-Cola is a Normal Good. Demand of Coca-Cola increases if income of
consumers increases and vice versa.
3. TASTE AND PREFERENCE
4. GOVERNMENT POLICIES
5. TIME
6. AGE GROUP OF POPULATIONS

SUPPLY ANALYSIS
LAW OF SUPPLY:
Represents the direct relationship between the quantity demanded of a good and its price.
SUPPLY CURVE:
Correlation between the cost of the good
and the quantity supplied for a given period.
As the quantity produces increases, marginal
Cost increases.
SHIFT IN SUPPLY CURVE:
If the price of Coca-Cola increases their will be increase in supply of Coca-Cola up to a

certain level and supply curve shifts rightwards. If producers continuously increases the
price, the demand of it decreases and curve shifts leftwards.
FACTORS AFFECTING SUPPLY
1.PRICE:
If there is an increase in the price of Coca-Cola, the producers will be willing to produce
more products.
2.TECHNOLOGY:
Advancement in technology increases supply as it lowers the cost of production.
3.NUMBER OF CONSUMERS:
Large number of consumers results in more supply from suppliers .
MARKET EQUILIBRIUM
State in which market supply and market demand balance each other, resulting in
stable prices.
CHANGE IN MARKET EQUILIBRIUM
Change in market Demand and Equilibrium price:
When there is an increase in the price of Coca-Cola, the demand of Coca-Cola

increases and demand curve will shift to right. Reasons are;
• Increase in income of consumers.

• Rise in price of substitute drinks.
• Change in customers taste and preferences.
Change in market Supply and Equilibrium price:
when there is a decrease in the price of Coca-Cola, the quantity demanded

will increase and the supply curve will shift outwards. Reasons are;
• Fall in cost of Production.

• Fall in price of substitutes.
• Improvement in technology for production. ( Higher productivity and Efficiency )
ELASTICITY
How much one variable response towards the change in the other variable.
ELASTICITY OF DEMAND:
Degree of responsiveness of quantity demanded of a particular product;
Two variables are considered while measuring the elasticity of demand:
• Demand.
• Determinants of Demand.
FORMULA:
TYPES OF ELASTICITY OF DEMAND
There are three types of elasticity of demand:
1.Price Elasticity of Demand.

2.Income Elasticity of Demand.
3.Cross Elasticity of Demand.
PRICE ELASTICITY OF DEMAND
The degree of responsiveness of change in demand due to change in
its price.
Factors Affecting Demand:

• Availability of Substitutes.
• Time.
• Income Level.
• Proportion Of Income Spend on Goods.
CROSS ELASTICITY OF DEMAND
Degree of responsiveness of the demand of one good to changes in

the price of a related goods.
DEGREE:
• Negative Cross Elasticity ( Complementary Goods ).
• Positive Cross Elasticity ( Substitute Goods )
INCOME ELASTICITY OF DEMAND
Degree of responsiveness of demand for a good to a given change in income.
DEGREE:
• Positive Income Elasticity ( Normal Goods )

Demand rises as income rises and vice versa.
• Negative Income Elasticity ( Inferior Goods )
Demand falls as income rises and vice versa.
DETERMINANTS:
• Level of Income.
• Time Period.
• Necessities and Luxurious.
• Availability of close Substitutes.
CONCLUSION
• Since our product is elastic in nature therefore if there is a slight increase
in price ,there is a tremendous change in the demand of the product,
because of the vast number of substitutes available in the market.

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COCA-COLA

SHIFT IN DEMAND CURVE:

1.PRICE OF RELATED GOODS

2.INCOME OF THE CONSUMERS

6. AGE GROUP OF POPULATIONS

SHIFT IN SUPPLY CURVE:

If the price of Coca-Cola increases their will be increase in supply of Coca-Cola up to a

When there is an increase in the price of Coca-Cola, the demand of Coca-Cola

• Increase in income of consumers.

when there is a decrease in the price of Coca-Cola, the quantity demanded

• Fall in cost of Production.

1.Price Elasticity of Demand.

Factors Affecting Demand:

Degree of responsiveness of the demand of one good to changes in

• Positive Income Elasticity ( Normal Goods )

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