AP Microeconomics Essential Equations

AP Microeconomics Equations Flashcards

Total Revenue (TR)

Price × Quantity

Total Cost (TC)

Fixed Cost + Variable Cost

Profit

Total Revenue - Total Cost

Marginal Cost (MC)

deltaTotal Cost / deltaQuantity

Marginal Revenue (MR)

deltaTotal Revenue / deltaQuantity

Average Total Cost (ATC)

Total Cost / Quantity

Average Variable Cost (AVC)

Variable Cost / Quantity

Average Fixed Cost (AFC)

Fixed Cost / Quantity

Price Elasticity of Demand (PED)

(%delta Quantity Demanded) / (%delta Price)

Cross Price Elasticity (CPE)

(%delta QD of Good A) / (%delta Price of Good B)

Income Elasticity (YED)

(%delta Quantity Demanded) / (%delta Income)

Marginal Product (MP)

deltaTotal Output / deltaInput

Marginal Revenue Product (MRP)

MP × Price

Utility Maximization Rule

MUx / Px = MUy / Py

Profit Maximizing Rule (Firms)

Produce where MR = MC

Allocative Efficiency

P = MC

Productive Efficiency

Produce at minimum ATC

Gini Coefficient

A / (A + B), where A is the area between line of equality and Lorenz curve