The arc price elasticity of demand method is best used for:
A) small changes in price.
B) large changes in quantity demanded.
C) large changes in both price and quantity demanded.
D) infinitely large changes in price.

Question

Quizplus · Accepted Answer

The arc price elasticity of demand method is most suitable for measuring the responsiveness of quantity demanded to small changes in price. This method calculates the elasticity between two points on a demand curve, where the price and quantity values are not too far apart from each other. It is not appropriate for measuring large changes in either price or quantity demanded, and certainly not for infinitely large changes in price.

The Arc Price Elasticity of Demand Method Is Best Used