# Economics Assignment

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Submitted By SairaGulzar
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Elasticity
Introduction
This assignment will cover the core topic of economics i.e. Elasticity. Elasticity is concern to two major economic factors without no economy can survive, which are Demand and Supply because if we are not familiar with the demand and supply how can we come to know that how much demand of a particular item needs in the market and how much supply have to prepare to earn the revenue or maximum profit. Therefore, first, the theoretical concept of elasticity regarding demand and supply will be explained and then it will be applied on UAE economy.
Body:
Theoretical Concept of Elasticity
Elasticity can be defined as the degree of responsiveness in quantity demanded and quantity supplied in order to changes in price or to one of its determinants. These are some terms relating to measure the elasticities in term of demand and supply: Price elasticity of demand, Arc elasticity of demand, Income elasticity of demand, Cross elasticity of demand, Price elasticity of supply (Gans, 2011).
Price Elasticity of Demand: It can be stated as to what extent or to what degree, quantity demanded changes as an outcome of a change in price is called elasticity of demand. If we divide the marginal demand function by the average demand function (Gans, 2011), we will get elasticity of demand.
Mathematically representation:

Measurements of Elasticity of Demand (E)
There are three methods adopted to measure the Elasticity of Demand 1. Total Quality Method
This method approaches to how consumers’ expenditures or revenues of the firm change as an outcome of changes in prices. As, Prof. Marshall (Gans, 2011) has introduced the “Yarstick” of ‘unity’. Accordingly, E=1, E>1 or E<1.
In case of E=1, total expenditures or total revenues remain the same despite the change in price. As, when price (P) decreases, Quanity (Q) increases, but total revenue...

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