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Arc elasticity

Updated: Aug 20, 2021

Arc elasticity

This measure is called an are elastieity measurement because it is taking finite changes in X and Y, and so, ifwe imagine the relationship between X and Ybeing portrayed as a curve between two axes, we are measuring the proportionate change in Y as a result of a change in X over an are of this curve. The defects of this measure are that the value of the elasticity may depend on the size of the change in X taken (which is essentially arbitrary), and will certainly differ according to which of the three methods of measuring the proportionate change is chosen. These defects are avoided by the second measure: Point elasticity.

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James Knight
Editor of Education
James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.