It means demand is elastic or elasticity of demand is greater than one at point. ARC METHOD The arc method uses the average of the original price and the new price and the original quantity and new quantity to determine the elasticity of demand. Percent change in quantity Q2 Q1 Q2 Q12 100 percent change in quantity Q 2 Q 1 Q 2 Q 1 2 100.
According to this method elasticity of demand is measured on different points on a straight line demand curve.
This is called the midpoint method for elasticity and is represented by the following equations. Therefore Ed P1 P4 P1P. Elasticity is zero at point B of the demand curve where the demand curve touches the x-axis. Thus the price elasticity.