An important question for the company is how much it should charge for the product. Does it cost to raise the price? Want to lower the price? To answer this question, it is important to consider how much sales are obtained or lost due to price changes. This is where the price elasticity of demand is reflected. If the company is faced with elastic demand, then the percentage change in the quantity required for its output will be greater than the price change it imposes. For example, if a company facing elastic demand reduces its price by 10%, the demand may increase by 20%. Obviously, this has two effects on income: more and more people buy the company’s products, but they all buy at a lower price. In this case, the increase in quantity is greater than the decline in price, and the company will be able to increase revenue by lowering the price. Conversely, if the company wants to raise the price, the reduction in demand will exceed the price increase and the company’s revenue will decrease.