Deck 1 Flashcards
Marginal Rate of Substitution
Budget equation
Y= p1q1 + p2q2
Price elasticity of demand
Income elasticity of demand
Note the q and y denominators should be averages
Cross elasticity of demand
Total Costs TC
TFC + TVC
Total Variable Costs TVC
w * l (wage x labor)
Average Total Costs ATC
Average Variable Costs
Total Revenue
price x quantity
In case of perfect competition:
Average Revenue AR = p
Marginal Revenue MR= p
Marginal Revenue
Marginal Profits
MR-MC
Elasticity of Supply
Marginal Utility
The change in a consumer’s total utility when he consumes one additional unit is the marginal utility
Leaks = Injections
Taxes + Savings + iMorts = Govt exp + eXports + Investments
Multiplier
Keynesian Formula
Y = C + I + G + (X - M)
Keynesian Formula Split Up
C = Ca + bY
M = Ma + mY
Government Budget Balance
G – T
= G – (Ta + t*Y)
There is a deficit when G greater than T
calculate exact deficit:
(Govt budget balance/Y) *100 to get percentage
Inflation rate
Balance of Payments
X – M
= Xa – (Ma + m*Y)
Keynesian Formula
Y = C + I + G + (X - M)
split up:
C = Ca + bY
M = Ma + mY
Money Multiplier
1/Reserve Ration
Real GDP
nom GDP (t+1) / P.I (t+1) x 100
P.I (t+1)
P(t+1)/P x 100
MPC
Change in C / Change in Yd
MPS
Change in S / Change in Yd
Alternative leaks and injections
(S-1) = (G-T) + (X-M)
Balance of Payments
Xa-(Ma + m*Y)
Govt budgt balance
G-(Ta + t*Y)
Quantity theory of money
Yp = M*Velocity
