Microeconomics Formulas

Average Fixed Cost

Average Fixed Cost

(1) TFC÷Qs (2) ATC − AVC

(Quantity supplied to market by producers)

Average Variable Cost

(1) TVC÷Qs (2) ATC − AFC

Average Total Cost

AVC + AFC

Average Product

TP÷Units of Labor

Marginal Cost

∆ in TC ÷ ∆ in Qs

Marginal Product

∆ in TP ÷ ∆ in Labor

Total Cost

TFC + TVC

Total Revenue

P × Qs

Total Product

TR − TC

Average Revenue

TR ÷ Qs

Marginal Revenue

∆ in TR ÷ ∆ in Qs

XED (Cross-price Elasticity)

%∆ in QD of G₁ ÷ %∆ in P of G₂

Negative = Complementary Positive = Substitute

YED (Income Elasticity)

%∆ of QD ÷ %∆ of Y (Income)

Negative = Inferior Positive = Normal

PED (Elasticity of Demand)

%∆ in QD ÷ %∆ in P

Break Even Point

ATC intersects D

Productively Efficient

Lowest ATC

Allocatively Efficient

P = MC

Maximize Profit

MC = MR

Maximise Revenue

MR = 0

Socially Optimal Point

MC = D

Marginal Revenue Product (Change in revenue when one more worker is employed)

MP × P (For perfect competition) MP × MR (Imperfect competition)

Marginal Factor/Resource Cost (Cost of employing one more worker/machine)

∆ in TC ÷ ∆ in L