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COCA COLA:

business economic

Group members
Thotsawas S.

2014270074

Chonlathit C.

2014270075

Kanin M.

2014270077

Natthavipa P.

2014270079

Thanutporn A.

2014270081

Sasi P.

2014270080

Pailin P.

2014270087

Demand, supply and


elasticity

Objective:

Examine and analyze the demand of Coca Cola.

Examine and analyze the supply of Coca Cola.

Determine and understand the elasticity of the product.

Scope:

Understand the behavior of consumer when the price of a


product increases or decreases.

Analyze the change in demand due to some forces in the


market.

Introduction

Coca-Cola is a carbonated soft drink sold in


stores, restaurants, and vending machines
internationally.

The Coca-Cola Company claims that the beverage is


sold in more than 200 countries.

The Coca-Cola Company has, on occasion,


introduced other cola drinks under the Coke brand
name. The most common of these is Diet Coke, with
others including Caffeine-Free Coca-Cola, Diet
Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola
Zero, Coca-Cola Vanilla, and special editions
with lemon, lime or coffee.

Demand curve
Demand curve refers to the
quantity of the good that a
customer is willing to buy and
able to purchase over a period
of time
From the figure we can say
that when the price of product
increases , demand decreases,
when the price was P1 quantity
demanded was Q1,but when the
price increases to P2 then
quantity decreases to Q2.

Determinants of demand
Price of relative goods: Demand for Coca
Cola is also influenced by the change in
price of relative goods.
In case of Coca Cola there are number of

substitute goods available in the market, we


have Pepsi, Miranda, spirit, etc. now if the
price of Coca Cola increases whereas the
price of other aerated drinks remain the
same then the demand for Coca Cola will fall
down.

Determinants of demand

Determinants of demand
Government policy
As the study shows, there was a steep reduction in the demand
of Coca Cola when the pesticides were found in few samples of
Coca Cola. As a result consumer was shifting from Coca Cola
to other natural drinks so therefore the demand for Coca Cola
decreased.
Time
Time is an important factor that affects the demand of Coca
Cola e.g. the demand for Coca Cola goes up during festive
seasons and during summers

Composition of the population (age group)

Time is an important factor that affects the demand of Coca


Cola e.g. the demand for Coca Cola goes up during festive
seasons and during summers

Shift in demand curve:

Shift in Demand
Curve refers to the change in demand due to
change in factors other than price.

Rightward Shift: When the demand for product


increases, price being constant, due to change in
other factors e.g. Increase in income. If theres
an increase in the income of consumers in the
future, then theres a possibility that the
consumer will shift from local drinks in the
market to Coca Cola.
From this figure we can see that
when the income of the consumer
increases , the demand for Coca
Cola increases.

Leftward Shift: When the demand for the

product decreases at same price. e.g. the


demand for Coca Cola reduces when people
found that there was pesticides found in
few samples of Coca Cola.

Supply curve
As shown in the figure,
when the price of the
product was P1 then the
quantity supply is Q1,
whereas if the price
increases to P2 the
quantity supply also
increases to Q2. This
shows as the prices
increases the producers
are willing to supply more
to earn more profit.

In case of Coca Cola this holds true as

the price of Coca Cola increases there


will be increase in supply up to a certain
level as there are other constraints like
easy availability of closed substitutes.
In the long run if the producer
continuously increases the price of Coca
Cola then the demand for Coca Cola will
fall down because of various substitutes
available in the market.

Determinants of supply

Shift in Supply Curve:

Shift in supply
curve means change in quantity supplied due to
others factors while price remains the same.

Leftward Shift: Leftward shift takes place

when the supplier produces less at the


same price. E.g. decrease in the supply of
sugar, owing to increase in price and
excessive exports of sugar results in
decrease in production of Coca Cola.

Rightward Shift: Rightward shift takes

place when the suppliers are willing to


supply more at the same price. E.g. Due to
improvement in technology the cost of
production decreases and the suppliers are
able to supply more at the same price.

Elasticity:

The elasticity of demand for a


commodity is the rate at which quantity changes
as the price changes .

From the figure we can see


when the price of Coca
Cola was p, the quantity
demand was Q, when the
price increases to P then
the quantity demanded to
Q. Therefore we can say
that demand for Coca Cola
is elastic in nature and
its elasticity for demand
is more than 1.(Ed>1)

Determinants
elasticity

of demand

Cost structure analysis


(short-run profit
maximization)

Fixed costs

Rent or lease payments for the coca cola


factories

Salary paid

Insurance on machines use to create the drinks

Property tax

Variable cost

Raw materials such as plastic for the bottles,


mental for the can

Delivery charges to grocery stores, etc

Hourly wages for the worker

Assume that CocaCola is competing with many other firms in a


perfectly competitive market. The price of the good sold in
this market is $10 per unit. These costs, along with the
firm's total and marginal revenues and its profits for
different levels of output, are reported in Table .

The firm's equilibrium supply is 29 units. When the


firm produces 29 units of output, its average total
cost is found to be $6.90

In choosing to produce 29 units of output, the firm


earns $90 ($290 200) in profits.

The width is the difference between the market price


(the firm's marginal revenue), $10, and the firm's
average cost of producing 29 units, $6.90. This
difference is ($10 - $6.90) = $3.10. Hence, the area
of rectangle abed is 29 $3.1 = $90. In general, the
firm makes positive profits whenever its average
total cost curve lies below its marginal revenue
curve.

THANK YOU

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