Question

Using ARC ELASTICITY FORMULA What is the price elasticity of demand when the price changes from $4 per item to $5 per item?

Answer 1

If price changes from $4 per item to $5 per item, then to calculate the price elasticity of demand using arc elasticity formula, we need to know the change in quantity demanded.

$Arc Ed = \frac{Q2 - Q1} {P2 - P1} ×\frac{(P2 + P1) /2} {(Q2 + Q1)/2}.$