Coca-Cola Demand and Supply Analysis

This economic report analyzes the factors influencing the demand and supply of Coca-Cola. It examines how price, prices of related products, consumer income, tastes and preferences, and future price expectations affect demand. The report also explores how technology, consumer levels, and input costs influence supply. The core economic theories of supply and demand, and elasticity, are applied to Coca-Cola. The report includes a calculation of price elasticity of demand for Coca-Cola over several months, showing fluctuations and interpreting the results in relation to factors like the availability of substitute products and seasonal consumption patterns.

ECONOMIC

TABLE OF CONTENTS
Assessment 2....................................................................................................................................3
Factors influence demand of coca cola..................................................................................3
Factors influence supply of coca cola....................................................................................4
Economic Theory...................................................................................................................5
Assessing Elasticity of demand (Ed) and supply of Coca cola..............................................6
REFERENCES................................................................................................................................8

Assessment 2
In the market there are several kinds of goods as well as services are available which are
consumed by the local community. Further, the demand for a product or service become changes
and influence because of different number of the aspects and factors. At the present case there is
a beverage item selected in which product is like as Coca cola which affects because of different
kinds of factors. Apart from this, in the economic concept there are three key elements are
considered which are such as supply, demand as well as price of the product which are analysed
in the current study regarding Coca cola product.
Factors influence demand of coca cola
The Coca cola is a product which consumed by the customers at the worldwide and its demand
affects because of some factors which are mentioned as below:
 Price- When pricing level of the Coca product increase as well as reduce then there
demand gives response in opposite way. Further, due to enhance and decline price
demand of Coca coal reduce as well as improve respectively (Nattrass and Varma, 2014).
 Price of related product- In the market there are relative or substitute products of Coca
cola available which are such as Miranda, 7up, Pepsico etc. Further, in case price of the
substitute product gets down then demand of Coca cola declines because customers of
Coca cola switch towards that product and vice-versa.

 Income of customers- Increasing and higher the income level of consumers lead to
enhance demand of the Coca cola because flow of money in hand of individuals
improves. In opposite to this, due to reducing income and profit demand of Coca cola
also affects in adverse manner.
 Tastes and preferences- Apart from this, when the local community give preference for
drink the Coca cola rather than its substitute and other products then also demand of
chosen product will raise in the market (Choudhury and Hoque, 2004).
 Expectation of change in price in the future- In the future if the people thinks and
expect that pricing level of the Coca cola will be improve then they continue with that
product. Further, it is indication of enhancing demand.
In the graph when demand of the Coca cola product increase then demand curve shifts
from D1 to D2. On the other side in case demand declines then curve shifted towards D3 from
D1.
Factors influence supply of coca cola
 Price is the key factor by which demand influence and in accordance to that supply also
affects. There are positive and direct relation between the supply and demand in the
market.

 Technology is another aspect by which the company able to produce higher quality of
product at the same cost and offer in market to customer in same price. Sue to this supply
of the Coca cola product raises in the economy (Cwik and Wieland, 2011).
 When there are number as well as level of consumers of Coca cola are higher and lower,
then supply also gives response in same direction.
 Price and cost of input lead to make changes in the supply of Coca cola in the market.
The current and presented graph of shifting in supply curve shows that in case supply
enhance then curve shifts from AS1 to AS3. Apart from this due to reduce the supply level AS1
shifts towards AS2.
Economic Theory
In this current study there are law of supply and demand comes under existence which
shows that if demand of the Coca cola increase in the market then lead to increaser supply as
well. In opposite to that, when demand reduces then company not produce more number of
products by which supply also shifted downwards. The point at which both the supply and
demand curve intersect to each other at there price of Coca cola is determined. Hence, it can be
said that there are relationship between supply and demand is in the positive and direct manner
(Henderson, 2014). Apart from this, at the current study there are law of elasticity is also
included in which it has been analysed that due to changing in one factor along with the prices
there are how many changes come into consideration in the market and economy.

Assessing Elasticity of demand (Ed) and supply of Coca cola
The figure or level which shows that due to changing in the demand of Coca cola, level
of price change up to which extent is shows elasticity of demand. When level of demand enhance
then pricing factor also changes in the same direction which is shown in the above section using
the graphs. Further, the elasticity of demand is to be computed with the help of two factors like
as percentage change in demand as well as percentage change in the price Coca cola.
Month
Quantity
demanded
Percentage change of
demand
Price of Coca
cola
Percentage change of
price
1 250 - 20 -
2 290 16.00% 25 25.00%
3 360 24.14% 30 20.00%
4 400 11.11% 35 16.67%
5 510 27.50% 40 14.29%
Month
Percentage change of
demand Percentage change of price Price elasticity of demand
2 16.00% 25.00% 0.64
3 24.14% 20.00% 1.21
4 11.11% 16.67% 0.67
5 27.50% 14.29% 1.93
In this case, it has been analysed that price elasticity of demand of Coca cola product is
fluctuated in all the months. It has been assessed that in two months such as second and fourth

there are elasticity of demand is lower than one (Ed < 1). In opposite to that, at the end of third
and fifth month there are elasticity of the demand of Coca cola is higher than one (Ed > 1).
There are some factors as well as elements due to which elasticity of demand changes are
like as availability of substitute kind of product of Coca coal which are like as Pepsi, Mirianda,
Lemon, Nimbuzz etc. The Coca cola product is consumed by the people on the basis of time
factors such as more consumption is there in the summer season (Huttuen, 2014). On the other
side, in case there are winter season is going on then demand of Coca cola gets down and
reduces.

REFERENCES
Choudhury, A. M. and Hoque, Z. M., 2004. Ethics and economic theory. International Journal
of Social Economics. 31(8). pp.790 – 807.
Cwik, T. and Wieland, V., 2011. Keynesian government spending multipliers and spillovers in
the euro area. Economic Policy. 26(67). Pp. 493-549.
Henderson, J. V., 2014. Economic theory and the cities. Academic Press.
Huttuen, K., 2014. Managing the Demand-Supply Chain. John Wiley & Sons.
Nattrass, N. and Varma, G. V., 2014. Macroeconomics Simplified: Understanding Keynesian
and Neoclassical Macroeconomic Systems. SAGE Publications India.