• Nestl SA, the maker of Nescaf coffee and Purina pet food, reported a decrease in sales volume for the fourth quarter after raising prices to compensate for soaring production costs. Nestl's sales volume fell 2.6 percent over the last three months of 2022 while prices rose by an average of 10.1 percent. Other consumer-products companies are struggling with how much they can raise their prices without consumers cutting back on their purchases.
• The article explains that Nestl's: "... sales volumes fell 2.6% in the last three months of 2022, with prices rising by an average of 10.1%." Assume that sales volume refers to the number of packages of Nescaf coffee sold. Holding everything else constant, if the sales volume of Nescaf coffee decreases by 2.6 percent in response to a 10.1 percent increase in price would this mean that the demand for Nescaf coffee is price-elastic or inelastic? Briefly explain your answer.
• Refer to your answer to the previous question. Holding everything else constant, if the sales volume of Nescaf coffee decreases by 2.6 percent in response to a 10.1 percent increase in price would the revenue from sales of Nescaf coffee increase or decrease? Briefly explain your answer.