Paper 3 key equations and conditions (MICRO) Flashcards
Total cost
TFC + TVC or AC x Q
TFC
TC - TVC or AFC x Q
TVC
TC - TFC
Average cost
TC/Q
Marginal Cost
Change in TQ/Change in Q
Profit
TR - TC
Average product (labour)
TP/Q of labour
Supernormal profit
AR>AC
Marginal product
Change in TP/Change in Q of labour
Subnormal profit
AR<AC
Total Revenue
P x Q
Profit Max
MR = MC
Average revenue
TR/Q = P
Revenue Max
MR = 0
Marginal Revenue
Change in Total Revenue/ Change in Quantity
AC= AR
Is either normal profit, sales max, break even or Entry limit price
Allocative efficiency
D=S or MSB=MSC or P=MC
Productive efficiency
Bottom of AC! (AC=MC)
X efficiency
At any point on AC
Dynamic efficiency
LR Supernormal profit
Minimum efficient scale
AT the lowest point of AC on cost curve
Shut down condition
AR = AVC or AR<AVC
Average Utility
TU/Q
Utility max
MU = 0
Social Cost
Personal Cost(PC) + External Cost(EC)
Social Benefit
Personal Benefit (PB) + External Benefit (EB)
Profit Max (Labour market)
MRP=MCʟ
PED
%Change in Quantity Demanded/ %Change in price
PES
%Change in Quantity supplied/%Change in price
XED (Cross- price elasticity)
%Change in Quantity demanded A/%Change in price B
YED (Income elasticity of demand Y=income)
%Change in quantity demanded/%Change in income