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When income is low people quickly give up on items that aren’t of necessity. If the point is made that Coca-Cola is a luxury beverage then elasticity increases. “The more that a good is considered to be a luxury rather than a necessity, the greater is the price elasticity of demand†(McConnell and Brue, p...
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Coca-Cola is the world’s leading producer of soda with a market share of 53% in 2006 (New York Times, 2007), but there are so many different types of colas and sodas in the market. If Coca-Cola makes a price increase, a consumer could easily make a switch to another brand. It is the substitutability factor that locks Coca-Cola to a price in a market that is fiercely competitive with other brands...
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