ECONOMY ECONOMICS Arc Elasticity Definition
By WILL KENTON
Updated Apr 25, 2019
What is Arc Elasticity ?
Arc elasticity is the elasticity of one variable with respect to another between two given points. It is used when there is no general function to define the relationship between the two variables.
Arc elasticity is also defined as the elasticity between two points on a curve. The concept is used in both mathematics and economics.
The Formula for the Arc Price Elasticity of Demand Is The formula for the Arc price elasticity of demand is
ARC ED = ∆Q/∆P x P1 + P2/Q1 + Q2
A∆ - Change in quantity
∆P - Change in price
P1+P2 - Initial price + new price
Q1+ Q2 - Initial quantity + new quantity .
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