Suppose the market price for wheat changes, and we move from point A to point B on the wheat demand curve. If the price elasticity of wheat demand was -0.3 at point A and -0.4 at point B, what is a plausible value for the arc elasticity of demand for wheat between points A and B?
A) -0.25
B) -0.35
C) -0.45
D) -0.70

Question

Quizplus · Accepted Answer

The arc elasticity of demand is calculated as the average of the price elasticities at two points, so (-0.3 + -0.4) / 2 = -0.35.

Suppose the Market Price for Wheat Changes, and We Move