Price elasticity of demand is computed as the arc elasticity by:
A) dividing the slope of the demand curve by the average value of each variable between two points.
B) dividing the slope of the demand curve by the average value of each variable at one point.
C) calculating percentage changes relative to the value of one variable at one point.
D) calculating percentage changes relative to the average value of each variable between two points.

Question

Quizplus · Accepted Answer

Arc elasticity of demand is calculated by taking the percentage change in quantity demanded and dividing it by the percentage change in price, with both percentage changes calculated relative to the average values of quantity and price between two points.

Price Elasticity of Demand Is Computed as the Arc Elasticity