*Readers Question: How would I the price elasticity of demand if the mean price is $7.50 and the mean quantity is 20,000? I don’t even know where to begin. My text book does not offer a proper equation for a problem with missing numbers.*

Yes, to calculate elasticity of demand you would need to know the change in price and change in quantity.

There are different ways of calculating the % change in price and demand. It can be either arc elasticity of demand (taking mid point) or point elasticity

Prices Elasticity of demand calculates how responsive demand is to a change in price. With the two figures above, you cannot calculate elasticity. You would need to know two points on the demand curve.

The manager of a sporting goods store uses cost-plus pricing to determine the profit-maximizing price of bicycles. The cost of a bicycle to the store is RM80. The manager estimates that the PED is -3. What is the price of the bicycle that the manager must charged to the customer?