Memo 1: If we lower the price, do you think this is likely to lead to higher revenue, and how much potential revenue can we generate and how low should we go with our price? To estimate the price sensitivity of customers at the current price and determine the impact of lowering the price on revenue, Elasticity of demand is the most beneficial concept to use. An elasticity measures responsiveness of one variable to changes in another variable. There are two aspects of an elasticity that are important, which are whether it is positive or negative and whether it is greater than 1 or less than 1 in absolute value