Component |
Description |
Initial Quantity (Q1) |
The initial quantity of goods or services sold. |
Final Quantity (Q2) |
The final quantity of goods or services sold. |
Initial Price (P1) |
The initial price of the goods or services. |
Final Price (P2) |
The final price of the goods or services. |
Arc Elasticity |
The measure of elasticity between two points on a demand curve. |
Formula |
Arc Elasticity = ((Q2 – Q1) / (Q2 + Q1)) / ((P2 – P1) / (P2 + P1)) |
Purpose |
Used to measure the responsiveness of quantity demanded to changes in price over a specific range of prices. |