Economics Macro + Micro formulae

Total Cost

Total Cost

TFC + TVC

Total Fixed Cost

TC - TVC

Total variable cost

TC - TFC

Total Cost

AC x Q

TFC

AFC x Q

Total variable cost

AVC x Q

Average Cost (AC)

TC / Q

Average Fixed Cost

TFC / Q

Average variable cost

TVC / Q

AC

AFC + AVC

AFC

AC - AVC

Average variable cost

AC - AFC

Marginal Cost

Change in TC / Change in Q

Total Revenue

P x Q

Average Revenue

TR / Q or (P x Q / Q)

Marginal Revenue

Change in Total Revenue / Change in Quantity

Total Product

Average Product x Quantity of Labour

AP x QL

Average Product

Total Product / Quantity of Labour

TP / QL

Marginal Product

Change in Total Product / Change in QL

Returns to Scale?

% change in output > % change in input (increasing returns to scale, LRAC slopes downwards)

% change in output = % change in input (constant returns to scale, LRAC is straight)

% change in output < % change in input (decreasing returns to scale)

Profit

TR - TC or AR - AC (per unit)

Supernormal profit

TR > TC or AR > AC

Subnormal profit

TR < TC or AR < AC

Profit Max

MR = MC

Revenue Max

MR = 0

Sales Max

AR = AC

Profit Satisficing

Any point between profit max and sales max

Allocative efficiency

D = S or MSB = MSC or P = MC

Productive Efficiency

Lowest point on AC curve

X efficiency

On AC curve at any Quantity

Dynamic Efficiency

LR Supernormal profit which is then reinvested

Minimum Efficient Scale (MES)

Min Output where all EoS are exploited (first output level where LRAC stops )

Shutdown condition

AR = AVC

Concentration Ratio

N : total market share

Total utility

Average Utility x Q

Average utility

Total utility / Q

Marginal Utility

Change in total utility / change in Q

Utility maximisation

Marginal Utility = 0 or Marginal utility = P

PED

% change in QD / % change in P

PES

% change in Qs / % change in P

XED

% change in Qd of Good A / % change in P of Good B

YED

% change in Qd / % change in Y (income)

index number

raw number / base year raw number x 100

Profit Max Employer

MRP = MCLabour

Gini Coefficient

Area between Lorenz curve and line of perfect equality / area beneath Lorenz curve and line of perfect equality

AD

C + I + G + (X-M)

real gdp

Nominal GDP / Price Index x 100

gdp inflator

nominal gdp / real gdp x 100

GNI

gdp + net factor income

green gdp

real gdp - environmental costs

multiplier

1/mptoconsume or 1/mpw ( mps + mpt + mpi)

change in national income

initial injection x multiplier

accelerator

increase in rate of growth of gdp → higher investment → further increase in rate of gdp growth

budget deficit

Gs > Tax rev in a year

budget surplus

tax revenue > gs in a year

unemployment rate

unemployed / labour force x 100

weighted price index (CPI)

convert prices to index

multiply by weights

add up weighted prices

divide by total weights

real interest rate

nominal interest rate - inflation rate

taxable income

income - tax free allowance

average rate of tax

tax paid / income earnt x 100

marginal rate of tax

change in income tax paid / change in income earnt

Absolute poverty

< $2.15 a day

Relative poverty

< 60% of median income

ca deficit

financial + capital acc deficit

ca surplus

financial + capital account deficit

terms of trade

index x prices / index m prices x 100

HDI

0.8 and above - very high

0.7 to 0.79 - high

0.55 to 0.69 - medium

<0.55 - low

bond yield

coupon / market price x 100

money multiplier

1/ reserve requirement

fisher equation

MV (money supply x velocity of money circulation) = PQ (average price level x qty goods services)

V and Q being fixed

liquidity ratio

current assets / current liabilities x 100

capital ratio

capital / loans x 100