Neha and Sonam consume only Coke and Pepsi in a two person and two goods exchange economy. Nehaconsumes these two goods in fixed proportions such that she consumes 2 bottles of coke with 1 bottle of Pepsi.Sonam's utility function is given by U = 4P + 3C . In the economy, there is a total of 100 bottles of Pepsi and 200bottles of Coke. If Neha initially had 60 bottles of Pepsi and 80 bottles of coke, then in the equilibrium position,Sonam will consume:
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Both companies are expected to report sluggish sales and stiff foreign-exchange headwinds in key overseas markets. And 2015 could bring more of the same, amid slowing economies and rising political volatility.
At the same time the picture is brightening in the U.S, where consumers are still drinking less soda but have begun paying more for it again. That has been enough in recent months to push U.S. soda retail sales back into positive territory in dollar terms, albeit barely.
Add it up, and revenue at both companies likely fell in the most recent quarter. Coke already warned in October that it would miss its profit target in 2014 for the first time in several years.
J.P. Morgan estimates fourth-quarter beverage volumes at Coke, which reports results Tuesday, contracted 1% in Brazil and Mexico, 2% in Europe and Japan, and 4% in China. Soda consumption in Mexico, which buys more Coke products per capita than any other country, has fallen after the government introduced a “fat tax’’ on sugary drinks last January.