Nestle to raise prices (again)

Some excellent revision material here for Year 13 Economics students; Nestle have announced that continued cost rises mean that they are going to have to increase prices again.

A chance for you to differentiate between fixed and variable costs and the effect of rising costs on the profit maximising equilibrium. You might also think about how the comment about how taking "a hit to its margins" might also have affected costs.

There is a hint of price elasticity of demand in the financial data issued by Nestle. According to the Financial Times, real sales volumes declined 2.6 per cent, as the world’s largest food maker pushed up prices by 10.1 per cent in the quarter. Brand loyalty tends to make demand price inelastic.