There is no formula. In some ways "story arc" is a buzzword label. The best way I can think of to comprehend how a good "story arc" happens is to read great short stories, a lot of them. Read both carefully and enthusiastically, and you'll begin to catch it in your subconscious, which is probably the place it should reside. Some recommendations from my own experience:
"The Lottery", Shirley Jackson
"The Dwarf", Ray Bradbury (or any of about fifty others)
"A Touch of Nutmeg Makes It", John Collier
"The Wall", Jean-Paul Sartre
"The Open Window", Saki
"Afterward", Edith Wharton
"Flowers for Algernon", Daniel Keyes (the original short story, not the expanded later novelization)
"Wine in the Desert", Max Brand
"Noon Wine", Katherine Anne Porter (a novella, but the story arc concept really applies to it)
"The Nine Billion Names of God", Arthur C. Clarke
"Everything that Rises Must Converge", Flannery O'Connor
"The Man Who Would Be King", Rudyard Kipling
"Silent Snow, Secret Snow", Conrad Aiken
"The Rocking Horse Winner", D. H. Lawrence
"A Rose for Emily", William Faulkner
"The Lagoon", Joseph Conrad
"The Country of the Blind", H. G. Wells
Plus, you'll have a hell of a good time reading.
There will be a test on Thursday.
caw.