Economic Analysis of Coca-Cola's Production and Market Impact

This report provides an economic analysis of Coca-Cola, focusing on the impact of production issues on market dynamics. The analysis examines how the company faced challenges due to unhygienic ingredients, leading to reduced production and supply. The report discusses the application of economic principles, such as supply and demand, and how they relate to Coca-Cola's situation, including the concept of deadweight loss. It also explores the company's response to these challenges, including efforts to improve ingredients and address environmental concerns. Furthermore, it uses a graph to illustrate the impact of supply reductions on the market, highlighting the resulting economic consequences. References to relevant academic sources are included to support the analysis.

CURRENT EVENT
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Coca cola is the company which operates at the global level and provide different kinds
beverages as well as cold drinks. Among all its products there are Coca cola is the product or
item which highly consumed by the customers worldwide but due to using unhygienic
ingredients level of consumption of the buyers reduces. Due to this kind of key and basic reason
health of the individuals become down and affected up to higher extent. Apart from this, due to
using such kind of ingredients it makes their eyes and throat burn. Consequent to this, Coca cola
reduced the production because of national forces and this leads to shortage of bad and
unhygienic condiment on the global level. The production was highly reduced and comes at the
cease level but the demand of coca cola in public was same. And, this leads in decrement of
financial status of company (Faridimehr and Niaki, 2012). But, later this problem was solved by
using highly nutritional as well as hygienic ingredients in order to repair the reputation of
company. The company's legal battle with the city was settled and to improve the placement and
effectiveness of odour control filters, plant operators began working with air quality regulators.
Also, to make the public of city satisfy that they had eradicated this issue, The Coca cola started
a service in which any visitor can come and could smell what was coming from the carbon-
neutral roof vents. Initially, there was limited public access to plant which was later increased.
In the current situation there are production of the company such as the Cola cola reduce
for the particular product like as Cola cola. The key reason to reduce and cease the production is
that because of the current kind of Cola cola the local community affects up to the higher level in
terms of health. Due to this, demand of the Cola cola is constant or raise but in this opposite
supply in the market reduces and deadweight loss comes under consideration in the firm
(Caravle, 2012). At this position, economic theory such as law and supply is applied which
shows that if level of one aspect gets change then it impacts on the business entity. According to
this law in the market when demand of the current Cola cola is high and company unable to
provide in the adequate manner then the firm incur loss which called as deadweight loss. In the
Cola cola company also deadweight loss comes into consideration.

By considering the above graph for the chosen entity for the Cola cola it can be clearly
stated that at the level of quantity such as Q+ supply is high in the market. Further, due to cease
of the overall production the company not able to provide in the market which lead to reduce
supply. Hence, the supply curve shifted below at the same demanded quantity and by which
company incur loss which shown through red highlighted area. Apart from this, the in the
respective firm marginal damage cost comes under consideration which is inverse situation for it.
Furthermore, due to changes in demanded quantity along with the supply price factor also gets
fluctuate which clearly indicted in above mentioned graph.

REFERENCES
Caravle, G., 2012. Equilibrium and Economic Theory. Routledge.
Faridimehr, S. and Niaki, S. T. A. , 2012. Erratum to “Determination of price and warranty
length for a normal lifetime distributed product”. International Journal of Production
Economics. 137(2). Pp. 309-310.