bågelasticitet

Bågelasticitet, or arc elasticity, is a concept used in economics to measure the responsiveness of supply or demand to a change in price. Unlike point elasticity, which measures elasticity at a specific point on a curve, arc elasticity calculates elasticity over a range or segment of the curve. This is particularly useful when dealing with significant price changes where the elasticity might vary considerably.

To calculate arc elasticity, the midpoint formula is commonly employed. This formula averages the initial and final quantities and prices to determine the elasticity. The formula for arc elasticity of demand is ((Q2 - Q1) / ((Q1 + Q2) / 2)) / ((P2 - P1) / ((P1 + P2) / 2)), where Q1 and P1 are the initial quantity and price, and Q2 and P2 are the new quantity and price. A similar formula applies to the arc elasticity of supply.

The benefit of using arc elasticity is that it provides a single, consistent measure of elasticity regardless of whether the price increases or decreases. This is not the case with simple percentage change calculations, which can yield different results depending on the direction of the price change. Arc elasticity offers a more robust measure for analyzing how a market responds to larger price movements.