Article Analysis Paper
University of Phoenix | ECO 365
How much effect does the consumption of caffeine by people translate into microeconomics? We will be discussing the consumption of caffeine and how it has “dramatically over the last decade through increased coffee and ‘energy drink’ consumption” (McIlvain, Noland, & Bickel, pp. 235-244, 2011). We will look at the affects it has had, and see if that has impacted and area of supply and demand, as well as market prices for the examples to come.
Trends in Consumption Patterns:
The consumption of coffee or Mt. Dew, even Red Bull or other energy drinks such as Monster or NOS have become ever more ...view middle of the document...
We will look more into that with the discussion of Market Prices and Supply and Demand.
Shift Factors of Supply and Demand:
According to the Economist, (Economist, 2012) the graph below describes the supply and demand with energy drinks:
Obviously, the less something is, the more people will buy. In this case there is a downward slope which shows a decrease in price and an increase in amount bought. This is showing that people are more willing or likely to purchase them, when the price is low. The lower the price, the more they can afford to buy. According to Colandar p. 633, one shift factor includes sales tax affecting supply. “When there are higher sales taxes, the curve shifts up, therefore causing import prices to rise”. This is true with any product, not just energy drinks.
The approximate price for a monster energy drink is about $2.50 a can, and $2.99 for red bull. So by this example, if a can is $2.50 then they are looking at a 90 million supply rate, whereas a price of $2.99 they are...