Formulas

Question 1

Total costs

Answer 1

total fixed costs + total variable costs

OR

average costs x quantity

Question 2

Total fixed costs

Answer 2

total cost – total variable costs

OR

average fixed costs x quantity

Question 3

Total variable costs

Answer 3

total cost – total fixed costs

OR

average variable costs x quantity

Question 4

Average cost

Answer 4

total cost / quantity

OR

average fixed costs + average variable costs

Question 5

Marginal cost

Answer 5

△total cost / △quantity

Question 6

Average product

Answer 6

total product / quantity of labor

Question 7

marginal product

Answer 7

△total product / △quantity of labor

Question 8

total revenue

Answer 8

price x quantity

Question 9

average revenue

Answer 9

total revenue / quantity

Question 10

marginal revenue

Answer 10

△total revenue / △quantity

Question 11

profit

Answer 11

total revenue – total cost

Question 12

price elasticity of demand

Answer 12

%△ quantity demanded / %△ price

Question 13

price elasticity of supply

Answer 13

%△ quantity supplied / %△ price

Question 14

income elasticity of demand

Answer 14

%△ quantity demanded / %△ income

Question 15

gini coefficient

Answer 15

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

Question 16

marshall lerner condition

Answer 16

PED(exports) + PED(imports) > 1

Question 17

taxable income

Answer 17

total income earned – tax free allowance

Question 18

average rate of tax

Answer 18

(total income tax paid / total income) x 100

Question 19

marginal rate of tax

Answer 19

(△total income tax paid / △total income) x 100

Question 20

subnormal profit

Answer 20

average revenue < average cost

Question 21

profit maximisation

Answer 21

marginal cost = marginal revenue

Question 22

revenue maximisation

Answer 22

marginal revenue = 0

Question 23

normal profit, sales maximisation point, economic break-even point, entry limit price

Answer 23

average cost = average revenue

Question 24

allocative efficiency

Answer 24

demand = supply,MSB = MSC,P = C

Question 25

productive efficiency

Answer 25

minimum point on average cost curve = MC

Question 26

shutdown condition

Answer 26

average revenue < average

Question 27

average utility

Answer 27

total utility / quantity

Question 28

marginal utility

Answer 28

△total utility / △quantity

Question 29

utility maximisation

Answer 29

marginal utility = 0

Question 30

social cost

Answer 30

private costs + external costs

Question 31

social benefit

Answer 31

private benefit + external benefit

Question 32

profit maximisation in labor market

Answer 32

marginal revenue product = marginal cost of labor

Question 33

gross domestic product

Answer 33

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)

Question 34

consumer price index number

Answer 34

(current value / base year value) x 100

Question 35

percentage change

Answer 35

([actual – original] / original) x 100

Question 36

nominal GDP

Answer 36

quantity of goods and services produced x current prices

Question 37

real GDP

Answer 37

(nominal GDP / price index) x 100

price index = CPI or GDP deflator

Question 38

GDP deflator

Answer 38

(nominal GDP / real GDP) x 100

Question 39

GNI

Answer 39

GDP + net income from abroad

Question 40

green GDP

Answer 40

GDP – environmental costs

Question 41

aggregate demand

Answer 41

C + I + G + (X–M)

Question 42

GDP per capita

Answer 42

GDP / total population

Question 43

multiplier

Answer 43

1 / (1–MPC)