Enter the demand and price of a good or service at two different points to calculate the arc elasticity.
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Arc Elasticity Formula
The following formula is used to calculate the arc elasticity.
- Where Ep is the arc elasticity
- Q is the quantity of good sold
- P is the price of the good at the same time
Arc Elasticity Definition
Arc elasticity is a measure of how the relationship between the demand and price of a good or service changes over time with a change in either of those metrics.
Arc Elasticity Example
How to calculate an arc elasticity?
- First, determine the quantity.
Calculate the initial and final quantities.
- Next, determine the price.
Calculate the initial and final price.
- Finally, calculate the arc elasticity.
Calculate the arc elasticity using the equation above.
FAQ
What is arc elasticity?
Similar to price elasticity, arc elasticity measures the relationship with how the demand for a good or service changes with a change of price.
