A numerical simulation has been performed of a high-velocity argon plasma arc flow in a low power arcjet including a finite-rate chemical kinetic model. Electrons, ions, molecular ions (), neutral atoms including the ground and excited argon atoms (Ar-*) are treated as separate species in the plasma mixture. The chemical reactions considered are excitation, de-excitation, ionization and recombination processes, in which reactions involving excited argon atoms (Ar-*) and molecular ions () are taken into account. The relative importance of different production and loss processes in determining the densities of excited argon atoms and ions is calculated inside the constrictor and expansion portion of the nozzle. The roles of the excited argon atoms and molecular ions are investigated. It is found that excited argon atoms play an important role in the ionization of argon atoms in the core of plasma arc, while the molecular ions have a significant effect on the recombination process at the arc fringes inside the constrictor and in the arc attachment zone of the anode.