ECO401 Economics Formula

ECO401 Economics Formula

Lesson 1-45

Price Elasticity of Demand=P€d = Percentage change in Quantity Demanded/ Percentage change in Price

Price Elasticity of supply=P€s = Percentage change in Quantity Supplied/ Percentage change in Price

Income Elasticity of Demand: Price Elasticity of Supply: Y€d = Percentage change in Quantity demanded/ Percentage change in Income

Cross-Price Elasticity of Demand: Pb€da = Percentage change in Demand for good a/ Percentage change in Price of good b

The quadratic demand function: Qd = 60 – 15P + P2

The formula of elasticity = (dQ / dP) (P/Q)

MARGINAL RATE OF SUBSTITUTION= MRS= dY = MUX

dX MUY

Profit=TR-TC

Average physical product =APP = TPPF/QF

Marginal physical product= ΔTPPF/ΔQF or MPP_x=MPP_L

P_X P_L

MARGINAL RATE OF TECHNICAL SUBSTITUTION= MRTS = Δ K/ Δ L

Total Cost (TC)= FC + VC

Average variable cost (AVC) = TVC/Q

Average fixed cost (AFC)= TFC/Q

MARGINAL COST (MC)= ΔTC/ΔQ

Total revenue=TR = P x Q.

Average revenue= AR = TR/Q

Marginal revenue= ΔTR/ΔQ

Slope of AR = dAR / dQ

Slope of MR = dMR / dQ

Net present value = PV – Purchase cost

Value added or GDP: Value of transaction

GDP = Sum of the value added by each of the firms

Growth rate of per capita income = Growth rate of total output - Growth rate of population

GDP Deflator = Nominal GDP / Real GDP

NNP = GNP – Depreciation allowance

GNP = GDP + Net factor incomes from abroad

NDP = GDP – Depreciation allowance

GDP at factor cost = GDP at market price – Indirect taxes

Per capita income= national income/ Total population of that country

NNP = GNP – Depreciation allowance

Real GDP year a = Nominal GDP year a X (Price Index base year / Price Index year a)

Growth rate in nominal GDP = Nominal GDP in year2- Nominal GDP in year1

AD = C + I + G + (X-M)

AD = AS, C + S + T = C + I + G + X – M

Y = AD = AS

Income = Expenditure = Output

Withdrawal = Injection= S + T + M = I + G + X

Marginal Propensity to Consume (MPC)= 1 – MPS or ΔC / ΔYd

Average propensity to consume (APC)= 1 – APS or C / Yd

Marginal propensity to save= MPS = 1 – MPC or MPS = ΔS / ΔYd

Average propensity to save= APS = 1 – APC or S / Yd

Real exchange rate= C = RER = PF x NER

PD

MULTIPLIER=k=1/(1-MPC)