Introduction to Microeconomics Essay Example | Topics and Well Written Essays - 500 words - 3

Introduction to Microeconomics - Essay Example Owing to high middle-class population growth in these countries, the food processors other than Nestlà © can also experience shift in demand of their products. Yet, determinant of Nestlà ©Ã¢â‚¬â„¢s shift in demand is not only the emerging market’s innate potential but also the increasingly appealing behavior of consumers in these markets towards Nestlà © brands. In the light of this strong shift in demand, Nestlà © can well forward rising input costs to its consumers without much affecting the sale-volume. This reflects relatively inelastic demand for Nestlà © products in emerging markets, developing a high revenue-potential to Nestlà © even in pace of rising input costs. Besides Nestlà ©, overall food processed market (mainly the food makers as Peers Danone and Unilever) can also effectively put into practice the rise in price in response to the rising food costs since the rightward shift in processed food’s market demand can well offset the leftward shift in its market supply thus raising the market’s equilibrium quantity with price. Yet by raising its price, food maker, Kraft Foods, may hurt its quantity demanded, and thus demand, due to elastic nature of its products’ demand; leftward movement along its demand curve, which is due to increased prices owing to left-shifted supply, may offset the rightward shift in its emerging markets’ demand. Further, due to its larger market share, Nestlà © can capture the large part of this shift in market demand; shift in Nestlà © products’ demand is expected to be larger than the shift in other food makers’ demand thus, rise in its equilibrium quantity should also be higher than others. VEVEY, Switzerland (Reuters) - Nestle, the worlds biggest food maker, said strong demand in emerging markets would help it offset a steep rise in input costs in 2011 after it beat sales forecasts for 2010. "We saw a significant uptick in raw material prices in the second half," Chief Financial