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The arc elasticity of demand refers to the relationship between changes in price and the subsequent change in quantity demanded.
Qo is the initial quantity demanded.
Q1 is the new quantity demanded.
Po is the initial price.
P1 is the new pric
The arc elasticity formula is used if the change in price is relatively large. It is more accurate a measure of elasticity than simple ''price elasticity''.
If the arc or price elasticity of demand is greater than 1, demand is said to be elastic. The demand curve has a ''flat'' appearance.
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