Principles of Economics used in Nestle Company

Oligopoly Market:

Nestle is a Oligopoly market because there are few number of firms are there entries and exit on this market is restricted. The product of Nestle is differentiated or undifferentiated the graph of oligopoly market is inelastic and slope is always downward.

Economics of Scale:

Nestle focuses on bulk production because to reduce the cost and to increase profit. Company focuses on bulk production to make the profit.

Producer Surplus:

This concept is applied in Nestle because the company has ability to produce more product than the market demand. 

Ex: Suppose market demand is 5000 and company is having the ability to produce 8000 then there will be a surplus of 3000.

Law of Supply:

When the supply of product increases the price of chocolates also increases, also increases profit. Because law of supply says that when these will be increase in supply the price of goods also increases. Here this concept is applied.

Opportunity Cost:

This concept is applied in this industry Nestle company used the raw material from the best company and scarifies to take raw material from other. Here opportunity lost is the opportunity cost.