Government Increases GST rates on soft drinks

Effect On Demand & Supply Curve:

 As the taxes on soft drink has increased,

the supply of Pepsi will contract because
now the company has to incur higher
amount than they use to, per unit, to
manufacture the product.
 As the price of Pepsi has increased, the
quantity demanded will decrease leading
to a movement on the demand curve.

Therefore, the equilibrium price will increase

and quantity demanded will decrease, leading
to a new market equilibrium.

 Relatively Elastic Demand (EP>1)

As a small change in the price brings about
more than proportionate change in quantity
demanded.
Government Increases GST rates on soft drinks

Effect On Demand & Supply Curve:

 As the taxes on soft drink has increased,

the supply of Pepsi will contract because
now the company has to incur higher
amount than they use to, per unit, to
manufacture the product.
 As the price of Pepsi has increased, the
quantity demanded will decrease leading
to a movement on the demand curve.

Therefore, the equilibrium price will increase

and quantity demanded will decrease, leading
to a new market equilibrium.

 Relatively Elastic Demand (EP>1)

As a small change in the price brings about
more than proportionate change in quantity
demanded.