Formulas Flashcards
Total costs
total fixed costs + total variable costs
OR
average costs x quantity
Total fixed costs
total cost – total variable costs
OR
average fixed costs x quantity
Total variable costs
total cost – total fixed costs
OR
average variable costs x quantity
Average cost
total cost / quantity
OR
average fixed costs + average variable costs
Marginal cost
△total cost / △quantity
Average product
total product / quantity of labor
marginal product
△total product / △quantity of labor
total revenue
price x quantity
average revenue
total revenue / quantity
marginal revenue
△total revenue / △quantity
profit
total revenue – total cost
price elasticity of demand
%△ quantity demanded / %△ price
price elasticity of supply
%△ quantity supplied / %△ price
income elasticity of demand
%△ quantity demanded / %△ income
gini coefficient
area between Lorenz curve and line of perfect equality / area beneath line of perfect equality
marshall lerner condition
PED(exports) + PED(imports) > 1
taxable income
total income earned – tax free allowance
average rate of tax
(total income tax paid / total income) x 100
marginal rate of tax
(△total income tax paid / △total income) x 100
subnormal profit
average revenue < average cost
profit maximisation
marginal cost = marginal revenue
revenue maximisation
marginal revenue = 0
normal profit, sales maximisation point, economic break-even point, entry limit price
average cost = average revenue
allocative efficiency
demand = supply,MSB = MSC,P = C
productive efficiency
minimum point on average cost curve = MC
shutdown condition
average revenue < average
average utility
total utility / quantity
marginal utility
△total utility / △quantity
utility maximisation
marginal utility = 0
social cost
private costs + external costs
social benefit
private benefit + external benefit
profit maximisation in labor market
marginal revenue product = marginal cost of labor
gross domestic product
Output method: sum of all goods and services produced in an economy in a year
Income method: sum of factor incomes (interest, wages & salary, rent, profit)
Expenditure method: total spending in an economy in a year = C + I + G (X–M)
consumer price index number
(current value / base year value) x 100
percentage change
([actual – original] / original) x 100
nominal GDP
quantity of goods and services produced x current prices
real GDP
(nominal GDP / price index) x 100
price index = CPI or GDP deflator
GDP deflator
(nominal GDP / real GDP) x 100
GNI
GDP + net income from abroad
green GDP
GDP – environmental costs
aggregate demand
C + I + G + (X–M)
GDP per capita
GDP / total population
multiplier
1 / (1–MPC)
