The Gunners have yet to lose a game this year, winning six and drawing four of their ten matches so far this year.
And Merson has been impressed with how the club have settled under their new manager.
"They are harder to beat, and Arteta is getting players to try and play, like [Mesut] Ozil, [Pierre-Emerick] Aubameyang is scoring goals. They're still open at times, but if you're giving Arteta a grade since he got there, it would be B+.
"He's doing something right. Show me someone that can run before they can walk! It's moving along steadily, and that's the best thing for him.
"If he'd come in and won five games on the trot, people would have thought he is the messiah, and then all of a sudden they'd have hit a bad run, and he'd be described as a one-hit-wonder.
"He's done it the right way, and it has moved along steadily. They're in with a big chance of the top five, which if City are banned, means Champions League football.
"Arteta will know what he needs to change next season. It's pointless coming in, going mad at players now, and then all of a sudden needing those players if others get injured.
"The players he'll want to get rid of don't need to know that right now. There will be some personnel changes in the summer."