Supply and Demand Drivers

Select a good or service to analyze and answer the following questions:
What are the drivers of demand (describe their impact on the demand curve)?

The main drivers of demand for Coca-Cola products are per capita income and the weather. Coca-Cola drinks have a higher demand during the months when the weather is warm. As the weather gets colder, the demand for the products goes down. Higher incomes will make consumers have more disposable incomes. An increase in the disposable income leads to a higher tendency to use the Coca-Cola products. The holiday season also sees to a higher intake of Coca-Cola products.

What are the drivers of supply (describe their impact on the supply curve)?

Two main drivers of supply would be government restrictions and new developments in the manufacturing company. If the company is restricted in regard to its supply of certain products, then the supply of that product is likely to decline. Moreover, a company’s supply system is likely to decline when the company is launching new developments.

Is the market price for this good or service determined by the invisible hand of the market? If not, how is it determined and why?

The competition in the food and beverage industry and specifically in the non-alcoholic beverage sector has been the biggest determinant of price in the sector. To maintain a large customer share, the company has put up measures to ensure that the price of goods remains low.

Has the demand curve for this good or service shifted to the left or right in the last few years? Why?

According to (Dharmasena, and Capps, 2009), the demand of non-alcoholic drinks rose steadily during the last few years of the 20^th century until 1997. After this, there has been a small decline in the demand. This implies that the demand has shifted to the left since 1997. The decline of demand in those few years could be as a result of the campaigns against intake of certain products that are supposedly bad for the health.

Has the supply curve for this good or service shifted to the left or right in the last few years? Why?

The supply has generally shifted to the right to cater for the high population of consumers. The high population has come about upon the expansion of the company to many countries.

Dharmasena, S., & Capps, O. (2009, July). Demand interrelationships of at-home nonalcoholic beverage consumption in the United States. In Agricultural & Applied Economics Association’s 2009 AAEA & ACCI Joint Annual Meeting, Milwaukee, Wisconsin.