Economics formulas Flashcards
PED
%∆ Qd / %∆P
[ demand after ∆p - initial demand ] / initial demand
÷
[ price after ∆p - initial price ] / initial price
XED
%∆ Qd₁ / %∆P₂
[ demand after ∆p₂ - initial demand₁ ] / initial demand₁
÷
[ price after ∆p₂ - initial price₂ ] / initial price₂
YED
%∆ Qd / %∆income
[ demand after ∆income - initial demand ] / initial demand
÷
[ income after ∆income - initial income ] / initial income
PES
%∆ Qs / %∆P
[ supply after ∆p - initial supply ] / initial supply
÷
[ price after ∆p - initial price ] / initial price
Aggregate Demand
AD = C + I + G + (X – M)
Productivity
total output / total input
Production cost per unit
total input cost / total output
CPI
[ cost of basket in current year / cost of basket in base year ] x 100
Inflation rate
[ ( current CPI - previous years CPI ) / previous years CPI ] x 100
Profit
total revenue - total costs
Social benefit
private benefit + external benefit
Social cost
private cost + external cost
Consumer surplus
CS = WTP - P
Terms of trade
[ export price index / import price index ] x base year index
base year index is 100
Marshall-Lerner Condition
PEDx + PEDm < 1 (Inelastic, worsens current account balance)
PEDx + PEDm > 1 (Elastic, improves current account balance)
