Economic Formulas

• Price elasticity of demand

  PED = %∆Qd/%∆P
• Income elasticity of demand

  YED = %∆D/%∆Y
• Cross elasticity of demand


  XED = %∆QdA/%∆PB
• Price elasticity of supply

  PES = %∆Qs/%∆P
• Consumption externalities


  MSB = MPB + MEB
• Production externalities


  MSC = MPC + MEC
• Profit


  Profit = Total Revenue - Total Costs
• Revenue


  TR = Price x Quantity
• Profit per unit


  Profit per unit = AR - AC
• Calculating PED


  1. %∆Qd = PED x %∆P

  2. %∆P = %∆Qd ÷ PED
• Calculating YED


  1. %∆D = YED x %∆Y

  2. %∆Y = %∆D ÷ YED
• Calculating XED


  1. %∆QdA = XED x %∆PB

  2. %∆PB = %∆QdA ÷ XED
• Calculating PES


  1. %∆Qs = PES x %∆P

  2. %∆P = %∆Qs ÷ PES
• Calculating MPB and MEB

  1. MPB = MSB - MEB

  2. MEB = MSB - MPB
• Calculating MPC and MEC

  1. MPC = MSC - MEC

  2. MEC = MSC - MPC
• Calculating Total Revenue and Total Costs

  1. TR = Profit + Total Costs

  2. TC = TR - Profit
• Calculating Price and Quantity


  1. Price = TR / Q

  2. Q = TR / P
• Calculating Average Revenue and Average Cost

  1. AR = Profit per unit + AC

  2. AC = AR - Profit per unit
• Marginal Revenue


  MR = ∆TR / ∆Q
• Total Cost


  TC = TVC + TFC
• Average Total Cost


  ATC = TC / Q
• Average Fixed Cost


  AFC = TFC / Q
• Average Variable Cost


  AVC = TVC / Q
• Average Product


  AP = Total Output / No. of workers
• Marginal Cost


  MC = ∆TC / ∆Q
• Rearranging Marginal Revenue and Quantity


  1. ∆TR = MR x ∆Q

  2. ∆Q = ∆TR / MR
• Rearranging Total Variable Cost and Total Fixed Cost

  1. TVC = TC - TFC

  2. TFC = TC - TVC
• Rearranging Total Cost and Average Total Cost


  1. TC = ATC x Q

  2. Q = TC / ATC
• Rearranging Total Fixed Cost and Average Fixed Cost

  1. TFC = AFC x Q

  2. Q = TFC / AFC
• Rearranging Total Variable Cost and Average Variable Cost

  1. TVC = AVC x Q

  2. Q = TVC / AVC
• Rearranging Total Output, Average Product and Number of Workers

  1. Total output = AP x no of workers

  2. No of workers = Total output / AP
• Rearranging Marginal Cost and Quantity


  1. ∆TC = MC x ∆Q

  2. ∆Q = ∆TC / MC
• Real GDP


  Real GDP = Nominal GDP x 100 / Inflation Index
• GDP per capita


  GDP per capita = total GDP / population
• Unemployment rate


  Unemployment rate = no. of unemployed / labour force pop'n
• Aggregate Demand


  AD = C + I + G + (X - M)
• Calculating Nominal GDP


  Nominal GDP = Real GDP x Inflation index / 100
• Calculating Inflation Index


  Inflation index = Nominal GDP / Real GDP x 100
• Calculating Total GDP and Population

  1. Total GDP = GDP per capita x population

  2. Population = total GDP / GDP per capita
• Calculating Number of Unemployed and Labour Force Population

  1. No. of unemployed = unemployment rate x labour force pop'n

  2. Labour force pop'n = no. of unemployed / unemployment rate