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Cocoa Cola Demand and Supply
Cocoa Cola Demand and Supply
Cocoa Cola Demand and Supply
The demand curve of Coca-Cola as any other normal goods’ demand curve is downward
slopping from left to right, showing the inverse relationship between the price of Coca-Cola and
the quantity demanded of Coca-Cola over a given time period. This relationship can be
explained by the law of demand which states that as price of a good increases (or decreases),
the quantity demanded of that good falls (or rises).Therefore, the lower the price of Coca-Cola,
the more a consumer is likely to buy. Hence, it can be concluded that price is major
determinant of demand. The effect of a change in price is illustrated by a movement along the
demand curve and is referred to as a change in quantity demanded.
SUPPLY CURVE:
Like its demand curve, the supply curve of Coca-Cola is that of a normal good which slopes
upwards from left to right, showing the relationship between the price of Coca-Cola and the
quantity of Coca-Cola supplied over a given period of time. The effect of a change in price is
illustrated by a movement along the supply curve which is often referred as a change in
quantity demanded.
Equilibrium is the point at which at a particular price both quantity demanded is equal to
quantity supplied.
From the above diagram, we can see that at a price of $1.50 both quantity demanded and
quantity supplied are equal at 1000.
INCOME: If there is an increase in the income of the consumer there will be an increase in the
demand of the coco cola, which in turns results in the right ward shift (increase in demand) of
the demand curve and vice-versa.
Taste and preferences: Taste and preferences affect the shifts in demand curve. In the
recent past there has been a product introduced in the market with the name zero sugar, which
has tend to increase the demand of coca cola.
COST OF PRODUCTION: If there is an increase in the prices of inputs such as flavor, sugar,
caffeine, there will be an increase in the cost of production of the product and supplier tends to
produce less of the product, which leads to left ward shift of the supply curve.
THE NUMBER OF CONSUMERS: Coca-Cola has a large number of consumers and high
level of brand loyalty, as a result suppliers are willing to supply more to cater for the need of its
customers.