A Reflection on Pepsi's Price & Income Elasticity
Colorado Technical University
This paper was prepared for [ECON212], [CS13-01], taught by [Professor James Pirner] on [July 23, 2014]. Introduction
The product chosen was Pepsi. It is a product produced by PepsiCo, which is one of the world's top marketer of premium juices and soft drinks. PepsiCo offers products to over 200 countries and territories, and our Global Brands are our biggest sellers. Pepsi is a carbonated soft drink sold in stores, restaurants, and vending machines internationally. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Pepsi is one of the world’s most iconic and recognized …show more content…
Since the product Pepsi is elastic in nature therefore if there is a slight increase in the price of the product, there is a tremendous change in demand of the product because of the number of other substitutes available in the market. Pepsi, a normal good is a good the demand for which increases as income increases. The income effect is positive and the substitution effect is positive. Therefore as price increases, demand falls, and vice versa. Normal goods have a positive income elasticity of demand.
Price, Cross-Price, and Income Elasticities of Demand for Coca-Cola and