Equations and conditions (micro)

Question 1

Total cost

Answer 1

TFC + TVC

or

AC x Q

Question 2

TFC

Answer 2

TC - TVC

or

AFC x Q

Question 3

TVC

Answer 3

TC - TFC

or

AVC x Q

Question 4

Average cost

Answer 4

TC/Q

or

AFC + AVC

Question 5

Marginal cost

Answer 5

Change in TC/change in Q

Question 6

Average product

Answer 6

Total product/Q of labour

Question 7

Marginal product

Answer 7

Change in total product/change Q of labour

Question 8

Total revenue

Answer 8

Price x quantity

Question 9

Average revenue

Answer 9

Total revenue/quantity = price

or

Do P x Q then divided by Q - then cancel out Qs and left with P

Question 10

Marginal revenue

Answer 10

Change in total revenue/change in Q

Question 11

Profit

Answer 11

TR - TC

Question 12

SNP

Answer 12

AR > AC

Question 13

Loss

Answer 13

AR < AC

Question 14

Profit max

Answer 14

MC = MR

Question 15

Revenue max

Answer 15

MR = 0

Question 16

AC = AR

Answer 16

Normal profit, sales max, breakeven, entry limit price

Question 17

Allocative efficiency

Answer 17

D = S

MSB = MSC

P = MC

Question 18

Productive efficiency

Answer 18

Min. point on AC

AC = MC

Question 19

X efficiency

Answer 19

At any point on AC

Question 20

Dynamic efficiency

Answer 20

LR SNP is necessary

Question 21

Minimum efficient scale

Answer 21

Lowest quantity level when AC curve stops decreasing

Question 22

Shutdown condition

Answer 22

Will consider shutdown if AR = AVC

Will shutdown if AR < AVC

Question 23

Average utility

Answer 23

Total utility/Q

Question 24

Marginal utility

Answer 24

Change in total utility/change in Q

Question 25

Utility max

Answer 25

Marginal utility = 0

Question 26

Social cost

Answer 26

Private cost + external cost

Question 27

Social benefit

Answer 27

Private benefit + external benefit

Question 28

Profit max: labour market

Answer 28

MRP = Marginal cost of labour

Question 29

Gini coefficient

Answer 29

Area between Lorenz curve and line of perfect equality / total area beneath line of perfect equality

Question 30

Marshall-Lerner condition

Answer 30

PED of x + PED of m > 1

This is required for currency depreciation to improve country’s current account position

Question 31

Taxable income

Answer 31

Total Y - tax free allowance

Question 32

Average rate of tax

Answer 32

Total Y tax paid / total level of Y x 100

Question 33

Marginal rate of tax

Answer 33

Change in total income tax paid / change in total income

x 100