The Arc Method

Any two points on a demand curve make an arc, and

the coefficient of price elasticity of demand of an arc
is known as arc elasticity of demand. This method is
used to find out price elasticity of demand over a
certain range of price and quantity. Thus, this method
is applied while calculating PED when price or By : Ghalib
quantity demanded of the commodity is highly Hussain
changed.
OR
Arc elasticity is a measure of average elasticity Methods of
between any two points on the demand curve. Measuring PED
Price Rs. Qd 1. The Outlay Method
10 5 2. The Percentage
5 12 Method
3. The Arc Method
4. The Point Method

Formula
Price Rs. Qd
10 5
PED = ∆Q X P1 + P2
5 12 ∆P Q1 +Q2

PED = 7 X 10 + 5
5 5 + 12

= 7 X 15
∆Q = Change in
5 X 17
quantity.
Q1 = Initial quantity.
= 105
Q2 = New quantity.
85
= 1.23
∆P = Change in price.
P1 = Initial price.
P2 = New price.

Formula
PED = ∆Q X P1 + P2