AP microeconomics formulas

Opportunity Cost

Explicit Cost + Implicit Cost

Total Revenue

P x Q. IF P and TR goes same way, it’s inelastic, and if it doesn’t, it’s elastic

Price Elasticity of Demand

△Q%/△P%, if absolute value < 1=inelastic, if absolute value > 1=elastic, Absolute value = 1 =unit elastic

Calculating %△

New-old/old x 100

Price Elasticity of Supply

△Q%/△P%

Income elasticity

△Q%/Income, normal good=positive and inferior good=negative

Cross-price Elasticity

△Qx%/△Py%, Positive=substitute, negative = complements

Consumer Surplus

Marginal Benefit-Price

Tax Revenue

Tax ( Consumer paying - Producer paying) x Q

Marginal Product

△Total Product/△Q

Marignal Cost of Labor

Wage/MP

Total Cost

VC+FC

Average Total Cost (ATC)

TC/Q

Average Variable Cost (AVC)

VC/Q

Average Fixed Cost (AFC)

FC/Q

Profit Maximization

MR=MC, keep producing as long as MR>=MC

Accounting Profit

Total Revenue - Explicit Cost

Economic Profit

Total Revenue - Explicit Cost - Implicit Cost

Economic profit/loss

between the AR and the ATC for the Q

Marginal Revenue

△TR/△Q, MR positive=elastic, MR 0 =unit elastic, MR negative=inelastic

Marginal Revenue Product

MP x MR ( Price of output)

Profit maximizing Q Hired

Hired at MRP=MRC

Total Resource Cost (TRC)

Wage x Q_L

Marginal Resource Cost (MRC)

△TRC/△Q