Key Equations

Question 1

Total cost

Answer 1

Total fixed cost + total variable cost

Question 2

Average costs

Answer 2

Total cost / quantity

Question 3

Marginal cost

Answer 3

Change in total cost / change in quanityt

Question 4

Average product

Answer 4

Total product / quantity of labour

Question 5

Marginal product

Answer 5

Change in total product / change in quantity of labour

Question 6

Total revenue

Answer 6

Price x Quantity

Question 7

Average revenue

Answer 7

Total revenue x Quantity (=price)

Question 8

Marginal revenue

Answer 8

Change in total revenue / Change in quanityt

Question 9

Profit

Answer 9

Total revenue - Total costs

Question 10

Supernormal profits

Answer 10

AR > AC

Question 11

Subnormal profit

Answer 11

AR < AC

Question 12

Revenue maximisation

Answer 12

MR=0

Question 13

AC=AR shows…

Answer 13

Sales maximisation
Economic break even (no loss or gain)
Entry limit price
Normal profit

Question 14

Allocative efficiency

Answer 14

MC=P

Question 15

Productive efficiency

Answer 15

Minimum point in AC

Question 16

X efficiency

Answer 16

Any point along AC curve

Question 17

Minimum efficient scale

Answer 17

On AC before it stops falling

Question 18

Average utility

Answer 18

Total utility / Quantity

Question 19

Marginal utility

Answer 19

Change in total utility / Change in quantity

Question 20

Utility maximisation

Answer 20

Marginal utility = 0

Question 21

Social costs

Answer 21

PC + EC

Question 22

Social benefits

Answer 22

PB + EB

Question 23

Profit max in a labour market

Answer 23

MPP of labour = MC of labour

Question 24

Price elasticity of demand

Answer 24

Percentage change in quantity demanded / Percentage change in price

Question 25

Price elasticity of supply

Answer 25

Percentage change in quantity supplied / percentage change in price

Question 26

Cross elasticity of demand

Answer 26

Percentage change in quantity demanded for good A / Percentage change in price of good B

Question 27

Income elasticity of demand

Answer 27

Percentage change in quantity demanded / percentage change in income

Question 28

Real GDP

Answer 28

Nominal GDP / Price index x 100

Question 29

Nominal GDP

Answer 29

Quantity of goods and services sold and produced X the current prices

Question 30

GDP deflator

Answer 30

Real x nominal gdp. X 100

Question 31

GNI

Answer 31

GDP + net factor invome

Question 32

AD

Answer 32

C I G (X-M)

Question 33

Multiplie

Answer 33

1 / 1-MPC 1/1-MPW

Question 34

Unemployment rate

Answer 34

Total unemployed / Size of the labour force

Question 35

Index number

Answer 35

Current value / Raw value of the base year. X 100

Question 36

Percentage change

Answer 36

Difference / Original x 100

Question 37

Gina coefficient

Answer 37

Area A / Area A + B

Question 38

Terms of trade

Answer 38

Average index price of X / Average index price of M x 100

Question 39

Taxable income

Answer 39

Total income tax paid / Total income level x 100