Formulas for Unit 01

• Disposable income

  Gross income - (income taxes + all other statutory payments)
• PED

  • % change in quantity demanded ÷ % change in price
  • Delta Q ÷ Q x P ÷ Delta P
• XED and YED

  • XED = % change in Qd of good A ÷ % change in P of good B
  • YED = % change in Qd ÷ % change in income or Y ÷ Delta Y
• PES

  • % change in quantity supplied ÷ % change in price
  • Change in supply ÷ original supply x original price ÷ change in price
• Social costs

  Private costs + external costs
• Social benefits

  Private benefits + external benefits