Question: The Coca-Cola Company markets the coke brand and manufactures concentrate for sale to regional bottlers. Coke bottlers mix concentrate with sweetener and water to produce the soft drink for supermarkets, restaurants, and other retail outlets. Possible sweeteners include corn syrup and sugar. Owing to federal restrictions against imports, sugar is relatively more expensive in the U.S. than the rest of the world.

(A) Why do U.S. soft drink bottlers use relatively more corn syrup than bottlers elsewhere in the world?

(B) Explain how the following changes would affect a Coke bottler’s demand curve for corn syrup: (i) removal of the federal restrictions against sugar imports; (ii) fall in the price of corn syrup; and (iii) increase in the sales of Pepsi.

(C) How would an increase in Pepsi advertising affect the demand for Coke?