When calculating the arc elasticity of demand,the percentage change in price (quantity)should be based on the average of the starting and ending prices (quantities).

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Quizplus · Accepted Answer

This is because the arc elasticity formula uses the average of the starting and ending price (quantity) in the denominator to eliminate the impact of the direction of change on the elasticity value. Using the midpoint formula ensures that the elasticity value is unbiased and does not depend on the specific starting or ending point.

When Calculating the Arc Elasticity of Demand,the Percentage Change in Price