If we think of an elasticity as the ratio of two percentage changes, we have to agree on the base to use for the changes (or we will come up with different numbers). Two possible bases are: the values before the change, and the values after the change of interest. The problem here is that there's no reason one is better than the other. A way around this problem is to use an arc elasticity which uses the average of the two possible bases as shown to the right.

   Notice that the denominator, of both the top and bottom fractions, is the average of the two possible bases. In this way, it doesn't matter which quantity we take as the "before" and which as the "after," we find the same number either way. On the other hand, this is a very unwieldy expression.

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