Micro: Definitions + Formulae

Question 1

Total Cost (TC) =

Answer 1

TC = Total Fixed Costs + Total Variable Costs
TC = Average Cost x Quantity

Question 2

Total Fixed Cost (TFC) =

Answer 2

TFC = Total Cost - Total Variable Costs
TFC = Average Fixed Costs x Quantity

Question 3

Total Variable Cost (TVC) =

Answer 3

TVC = Total Cost - Total Fixed Costs
TVC = Average Variable Costs x Quantity

Question 4

Total Revenue

Answer 4

TR = Price x Quantity

Question 5

Average Cost (AC) =

Answer 5

AC = Total Cost/Quantity
Average Fixed Costs + Average Variable Costs

Question 6

Marginal Cost (MC) =

Answer 6

MC = Change in total cost / change in quantity

Question 7

Price Elasticity of Demand (PED) =

Answer 7

PED = Percentage Change of Quantity Demanded/ Percentage Change in Price

Question 8

Price Elasticity of Supply (PES) =

Answer 8

PES = Percentage Change of Quantity Supplied/ Percentage Change in Price

Question 9

Income Elasticity of Demand (YED) =

Answer 9

YED = Percentage Change of Quantity Demanded/ Percentage Change in Income

Question 10

Allocative Efficiency

Answer 10

Demand = Supply, MSC = MSB, P = MC

Question 11

Productive Efficiency

Answer 11

Minimum point on Average Cost Curve, AC = MC

Question 12

Supernormal Profit

Answer 12

Average Revenue > Average Cost

Question 13

Profit

Answer 13

Total Revenue - Total Cost