econ formulas, graphs and stuff

Chap 1: PPF

llustrates scarcity, opportunity cost, and efficiency

Chap 2: GDP Formula

Y=C+I+G+NX

Chap 2: PED

Chap 2: Consumer & Producer Surplus

Chap 3: (Own Price) PED

Chap 3: Cross Price Elasticity

Chap 3: Income Elasticity of Demand

Chap 3: Elastic v Inelastic Demand

Elastic if PED > 1, inelastic if PED < 1

Chap 3: Total Revenue Relationship

Total revenue changes based on elasticity; elastic demand increases revenue with price decrease

Chap 4: Budget Constraint

Chap 4: Marginal Rate of Substitution (MRS)

rate at which a consumer is willing to substitute one good for another

Chap 4: Utility Maximization Condition

Chap 4: Indifference Curve

Graphs showing combinations of goods that provide the same utility, shows preferences

Chap 5: Profit Equation

profit as revenue minus total cost

Chap 5: MR = MC

profit maximization occurs when MR = MC

Chap 5: Total Revenue Function

Chap 5: AC and MC relationship

AC increases if MC > AC and decreases if MC < AC

Chap 5: Production Function

Q = f(K,L) (long run) Q = f(L) (short run)

Chap 6: Equilibrium Condition

P = MC for profit maximization

Chap 6: Short Run Supply Curve

The firm's supply curve is the MC curve above the AVC

Chap 6: Long Run Average Cost Curve

Firms enter/exit until P = LAC

Chap 6: Consumer & Producer Surplus in Perf Comp

Maximized under perfect competition

Chap 6: Shifts in Demand/Supply affecting Eq

Affect equilibrium price and quantity

Chap 7: Monopoly Pricing Rule

Profit maximization occurs where MR = MC

Chap 7: Marginal Revenue Relation

marginal revenue is less than price (for monopoly)

Chap 7: Deadweight Loss

Area representing lost consumer and producer surplus due to monopoly pricing

Chap 7: Social Cost of Monopoly

Allocative inefficiency due to higher prices and lower output

Chap 8: N Firm Concentration Ratio

Measures market dominance by largest firms

Chap 8: Nash Equilibrium

Stable outcome in game theory where no player has an incentive to change. Game theory is meant for analyzing strategic interactions among firms

Chap 8: Cournot v Bertrand Competition

Output competition vs. price competition

Chap 9: Labor Demand Equation

wage equals marginal revenue product of labor

Chap 9: Labor Supply Curve

Depends on wage rate, participation rate, and hours supplied

Chap 9: Equilibrium Wage

Where demand for labor equals supply

Chap 9: Economic Rent

an amount of money earned that exceeds that which is economically or socially necessary

Chap 10: Pareto Efficiency

No reallocation can make someone better off without making someone worse off

Chap 10: Pigouvian Tax

Tax to correct for negative externalities

Chap 12: Solow Growth Model

Y (output) = A (technological progress) x f(K,L) , output as a function of capital and labor

Chap 12: Convergence Hypothesis

Poorer countries can catch up to richer ones over time

Chap 12: Endogenous (Romer) Growth Model

Growth driven by factors like human capital and innovation

Chap 12: Returns to Scale

multiplying each input function by a multiplier. If the result is greater than the multiplier, it increases returns to scale. If the result is less than the multiplier, then the production function will result in decreasing return to scale

Chap 13: Multiplier Effect

Chap 13: Accounting Identity

consumption + investment + gov exp = consumption + savings + taxation

Chap 13: GNP at market prices

income at market prices + depreciation = GDP at national prices + net property income from abroad

Chap 13: Inflationary Gap

Chap 14: Demand For Money

Chap 15: IS-MP Model

Y = C + I + G

Chap 15: Keynesian Law

Y = C + S, I = C + I + G

Chap 16: Aggregate Demand Function

Chap 16: Short Run Aggregate Supply Curve (SAS)

upward sloping because firms tend to increase price levels when demand increases

Chap 16: Real Interest Rate Policy Rule

Chap 16: Long Run Aggregate Supply Curve

Chap 16: Variable Relationships

as well as demand and supply shocks impacting the AS and SAS

Chap 17: Fisher equation

Chap 17: Phillips Curve (Short run)

Chap 17: Phillips Curve Graph

Shows trade-off between inflation and unemployment

Chap 17: Variable Relationships

Chap 18: The 4 Employment Formulas

Chap 18: Natural Rate Of Unemployment

Chap 18: Okun’s Law

Relates changes in unemployment to changes in output

Chap 18: NAIRU Graph

Chap 19: Balance of Payments Identity

Chap 19: Real Exchange Rate

Chap 19: Purchasing Power Parity (PPP)

Chap 19: J curve

explains the effect devaluation has on a country's current account

Chap 20: Current Account Balance

Chap 20: Variable Relationships