Ib Economics formulas

Price Elasticity of Demand

%△ 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐷𝑒𝑚𝑎𝑛𝑑𝑒𝑑/ %△ 𝑃𝑟𝑖𝑐𝑒

Income Elasticity of Demand

 %△ 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝐷𝑒𝑚𝑎𝑛𝑑𝑒𝑑/ %△ 𝐼𝑛𝑐𝑜𝑚𝑒

Price Elasticity of Supply

% △𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑆𝑢𝑝𝑝𝑙𝑖𝑒𝑑/ %△ 𝑃𝑟𝑖𝑐𝑒

Total fixed cost

𝑁𝑜. 𝑜𝑓 𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡𝑠 × 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑒𝑎𝑐ℎ 𝑓𝑖𝑥𝑒𝑑 𝑎𝑠𝑠𝑒𝑡

Total variable cost

𝑁𝑜. 𝑜𝑓 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐴𝑠𝑠𝑒𝑡𝑠 × 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑒𝑎𝑐ℎ 𝑣𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝑎𝑠𝑠𝑒𝑡

Total cost

TFC+TVC

Total revenue

price x quantity

Average fixed cost

TFC/Quantity

Average variable cost

TVC/quantity

Average total cost

TC/Quantity

Average revenue

𝑇𝑅/Quantity

Marginal cost

△ 𝑇𝐶/△ 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

Marginal revenue

△ 𝑇𝑅/△ 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

Average tax rete

𝑇𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑡𝑎𝑥/𝑇𝑜𝑡𝑎𝑙 𝑎𝑚𝑜𝑢𝑛𝑡 𝑜𝑓 𝑖𝑛𝑐𝑜𝑚𝑒

Marginal tax rate

𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑡𝑜𝑡𝑎𝑙 𝑡𝑎𝑥/𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑡𝑜𝑡𝑎𝑙 𝑖𝑛𝑐𝑜𝑚𝑒

Allocative efficiency

MC=AR

Profit maximization

MC=MR

Nominal GDP

C+I+G+(X-M)

GDP per capit

Nominal GDP/Total Population

Real GDP 

Nominal GDP/Deflator

Real GDP per capita 

(𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝐺𝐷𝑃 / (1 + 𝐷𝑒𝑓𝑙𝑎𝑡𝑜𝑟))/𝑇𝑜𝑡𝑎𝑙 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

GNI 

𝐺𝐷𝑃 + 𝑁𝑒𝑡 𝑓𝑎𝑐𝑡𝑜𝑟 𝑖𝑛𝑐𝑜𝑚𝑒 𝑓𝑟𝑜𝑚 𝑎𝑏𝑟𝑜𝑎𝑑

CPI

(𝐶𝑜𝑠𝑡 𝑜𝑓 𝑏𝑎𝑠𝑘𝑒𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠/𝐶𝑜𝑠𝑡 𝑜𝑓 𝑏𝑎𝑠𝑘𝑒𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑖𝑛 𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟) x 100

Inflation

((𝑁𝑒𝑤 𝐶𝑃𝐼−𝑂𝑙𝑑 𝐶𝑃1)/𝑂𝑙𝑑 𝐶𝑃𝐼) × 100

Unemployment Rate

𝑁𝑜. 𝑜𝑓 𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑/Total labor force

Natural Rate of Unemployment

𝑆𝑡𝑟𝑢𝑐𝑡𝑢𝑟𝑎𝑙 + 𝐹𝑟𝑖𝑐𝑡𝑖𝑜𝑛𝑎𝑙 + 𝑆𝑒𝑎𝑠𝑜𝑛𝑎𝑙

Growth Rate 

((𝑅𝑒𝑎𝑙 𝐺𝐷𝑃 𝑖𝑛 𝑌2 − 𝑅𝑒𝑎𝑙 𝐺𝐷𝑃 𝑖𝑛 𝑌1)/𝑅𝑒𝑎𝑙 𝐺𝐷𝑃 𝑖𝑛 𝑌1 ) x 100

Real interest rate 

𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑟𝑎𝑡𝑒 − 𝑟𝑎𝑡𝑒 𝑜𝑓 𝑖𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛

Multiplier

1/1-mpc

Money Multiplier

1/𝑀𝑖𝑛𝑖𝑚𝑢𝑚 𝑅𝑒𝑠𝑒𝑟𝑣𝑒 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡

Exchange Rate of Country X

1/𝐸𝑥𝑐ℎ𝑎𝑛𝑔𝑒 𝑅𝑎𝑡𝑒 𝑜𝑓 𝐶𝑜𝑢𝑛𝑡𝑟𝑦 𝑌

Marshall-Lerner Condition

PEDexports + PEDimports > 1

Child Dependency Ratio

% 𝑜𝑓 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑢𝑛𝑑𝑒𝑟 15/% 𝑜𝑓 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 15 𝑡𝑜 64

Old Age Dependency Ratio

% 𝑜𝑓 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑜𝑣𝑒𝑟 65/% 𝑜𝑓 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 𝑏𝑒𝑡𝑤𝑒𝑒𝑛 15 𝑡𝑜 64