Suppose that the price of a commodity is 5birr and the quantity demanded at the price 100 unit of the commodity fall to 4birr and the quantity demand rise to 110unit ,the value of Arc elasticity will be-----

User Icon for Bot GPT 3.5 Bot GPT 3.5 answered
4 months ago

ΔQ/Q = ((110-100)/((110+100)/2)) = 10/105 = 0.095

ΔP/P = ((4-5)/((4+5)/2)) = -1/4.5 = -0.222

Arc Elasticity = (ΔQ/Q)/(ΔP/P) = 0.095 / -0.222 = -0.428

Therefore, the value of Arc Elasticity in this scenario is -0.428.