Quantitative Methods - 1 - Maths Flashcards
What are real numbers?
Any number that is real, be it a fraction, an integer or a decimal.
What are natural numbers?
Any positive integer.
Rational Numbers?
Fractions such as 3/4 etc. Exact values.
Irrational Numbers?
Decimals that cannot be displayed as by fractions.
What is a set?
A collection of things. e.g. a lecture theatre has 150 seats.
What is a budget set?
A budget set denotes the consumption bundles that are affordable to the consumer.
What letter in the greek alphabet is often used to show profit?
Pi.
What is long run with respect to Costs for firm?
All factors of production are variable in the long term.
What is the total cost function?
TC = Fixed Cost + (Variable Cost X Q)
Average Costs formula?
AC = TC/Q OR
(Fixed Costs/Quantity) + Variable Costs.
What is the relationship between the dependent and independent variables?
The dependent variable depends on the independent variable. The independent variable will always be on the x axis.
What are the differences between the domain and range?
Domain (x values) represents all ‘incoming numbers, whereas the range is the set of possible ‘outgoing numbers’ (y values).
If a slope on a graph is horizontal to the x-axis, how is it described?
A zero slope.
What is the formula of the point-slope method of finding the equation of a linear line?
y - y1 = m(x - x1)
What extra step must be used in order to use the point-point method compared to the point-slope method?
The gradient must be attained by working out the change in y divided by the change in x. Then plug it into the formula.
How in economics is it common to describe the relationship between price and quantity?
P = g(Q),
Price is a function of quantity.
Q is the independent variable and will therefore be on the x-axis.
A general form of the demand function may be:
P = aQ + b
Why do we have to plot the inverse demand function on diagrams?
Often we have a demand function Q = f(P), however, this would imply that Quantity is on the y-axis. As quantity is our independent variable we must find the inverse demand function such that P = f(Q).
What is a parabola?
Basically an x^2 function. If a > 0, it will have the shape u. If a < 0 it will have the shape n.
What are some examples of fixed costs?
Cost of rent, cost of equipment. They are generally fixed in the short run.
What are some examples of variable costs and what is the distinct difference between fixed costs and the former?
Raw material costs, energy.
Variable costs are given per unit as the contribution of variable costs differs with output.
Is electricity a fixed or variable cost?
Variable as it can change with output. It may have a base rate of payment that doesn’t change but it will increase when you use to much.
What can be can be said about FC and VC if VC is assumed to be constant?
If we plot Y= TC and X = Q and FC is constant, the total cost is linear. Then, the intercept is FC (on the Y axis/ TC/ when Q = 0), and the gradient of the line is variable cost (per unit).
