Please read the below case study “
CASE #1: COCA COLA The Coca-Cola company started 110 years ago as a small, insignificant one man business. Since then, it has grown into one of the largest companies in the world. The first chairman of the company was Dr. John Pemberton and the current chairman is Muhtar Kent. The demand for this product has made this company into a 50 billion dollar business. Coca-Cola was invented by Dr. John Pemberton, an Atlanta pharmacist. He concocted the formula in a three legged brass kettle in his backyard on May 8, 1886 by mixing lime, cinnamon, coca leaves, and the seeds of a Brazilian shrub. (Things Go Better With Coke 14). Coca-Cola, as he called the beverage, made its debut in Atlanta’s largest pharmacy, Jacob’s Pharmacy, as a five cent noncarbonated drink. Later on, the carbonated water was added to the syrup to make the beverage that we know today. Coca-Cola was named by Frank Robinson, one of Pemberton’s close friends. Pemberton, in a state of poor health and in debt, was forced to sell a portion of the company to Asa Candler. In time, Candler acquired the whole company for $2,300. Candler achieved a lot during his time as owner of the company. On January 31, 1893, the famous Coca-Cola formula was patented. He aggressively advertised Coca-Cola in newspapers and on billboards. In the newspapers, he would give away coupons for a free Coke at any fountain. Coca-Cola was sold to Ernest Woodruff in 1919 for 25 million dollars. He gave control of Coca-Cola to his son, Robert Woodruff, who would be president for six decades. Woodruff introduced the six bottle carton in 1923. He also made Coca-Cola available through vending machines in 1929. That same year, the iconic CocaCola bell glass was made available. He started advertising on the radio in the 1930s and on television in 1950. Currently Coca-Cola is advertised on over five hundred TV channels around the world. Often considered the best known trademark in the world, Coca-Cola is sold in about one hundred and forty countries to 5.8 billion people in eighty different languages. This is why Coca-Cola is the largest soft drink company in the world. Coca-Cola is worth more than 58 billion dollars on the stock market (Coca-Cola, The Coca-Cola Company 232)”
You have study the case study provided, and then conduct additional research on the companies in order to get information; also you must provide appropriate academic references (minimum 10) to support your conclusions and recommendations.
You have to address the answers to the following question in your essay:
a. What is the price elasticity of demand for gasoline? Is it elastic or inelastic? How about carbonated beverages? Is the demand elastic or inelastic?
b. What is the Income Elasticity of demand for carbonated beverages and gasoline? Which one has the higher elasticity?
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