Arc vs. Point Elasticity

Arc elasticity is used when price and quantity changes are large; it divides percentage changes by the averages of the two prices and quantities (the midpoint method), giving the same answer whether price rises or falls. Point elasticity is used for very small changes and is computed at one location on the curve using the derivative (or local slope) times P/Q. The midpoint/arc approach is favored in AP/intro courses precisely because it removes the direction-of-change ambiguity that plagues simple point calculations.