AP Microeconomics Exam Formulas
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Last updated 2:23 PM on 4/14/23
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19 Terms
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Total revenue test
P x Q = Total revenue
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Elasticity Coefficients
Change in Quantity / Change in Price
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Absolute value > 1
Elastic
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Absolute value < 1
Inelastic
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Cross Price Elasticity - Negative
Complement
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Cross Price Elasticity - Positive
Substitute
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Income Elasticity - Negative
Inferior good
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Income Elasticity - Positive
Superior/Normal good
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Profit Maximizing Point
MC = MR
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If profit is not maximized at MC=MR
MC less than MR
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Cost Benefit
Continue doing something until MC = MB
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Utility per dollar Maximization
if the MU per dollar for good A is greater than it for good B, then you should consume less of good B and more of good A until MUA/PA = MUB/PB
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Lowest Cost Resource Combination of Production
Use more of a resource that has greater MR
MPL/PL=MPC/PC
MPL/PL=MPC/PC
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Marginal Cost of Labor
MC = WL/MPL
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Marginal Revenue Product
Change in TR / Change in Quantity of R
OR
MR x Price
OR
MR x Price
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Absolute Advantage
Entity that can produce a greater quantity for the same cost
OR
The same quantity at a lower cost
OR
The same quantity at a lower cost
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Comparative advantage
The entity that can produce at a lower opportunity cost
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Outputs
(Other Over)
Opportunity cost of A is
B/A units of B
Opportunity cost of A is
B/A units of B
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Inputs
(It Over)
Opportunity cost of A is
A/B units of B
Opportunity cost of A is
A/B units of B