Eco 365 Article Analysis - Energy Drinks

Article Analysis Paper

University of Phoenix | ECO 365

3/24/2014

Introduction:

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 popular over the past decade. In 2002, according to (McIlvain, Noland, & Bickel, pp. 235-244, 2011), retail sales were hitting “$1.2 billion but have increased 440% to $6.6 billion in 2007”. When this article was written in 2011, it was close to $9 billion dollars. There was a report done that said “31% of teens drink energy drinks”. The demographics for this type of product will not vary too much; as there will always be people who need this stimulant. It can be the business man, or the student staying up late working on a paper; either way this product will always “have a strong demographic” (McIlvain, Noland, & Bickel, pp. 235-244, 2011).

Utility:

“The pleasure or satisfaction people get from doing or consuming something, and the price at doing or consuming something” (Colander, D.C, 2010). This is true when it comes to energy drinks. People love them, and some could even be addicted to them. I work with a guy who will drink two to three in a 10 hour period, every day. He may not eat, but he will have his energy drink. So will changes in price change the way he does things? After all, microeconomics is the “study of individual choice and how that choice is affected by the economy”. We will look more into that with the discussion of Market Prices and Supply...