Calculations

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Created by
Norah Bendiksen

Cards (23)

  • The marginal cost curve is the change in total costs as output changes.
  • Marginal Cost = Change in Total Cost / Change in Output
  • Total Revenue (TR) = Price x Quantity Sold
  • Total Revenue (TR) is the amount received from selling goods or services, calculated by multiplying price per unit by quantity sold.
  • Average revenue (AR) = TR/QS
  • Average revenue (AR) is the average amount received per unit sold, calculated by dividing total revenue by the number of units sold.
  • Price elasticity of demand measures how sensitive consumers are to changes in price, with values greater than one indicating that percentage change in quantity demanded exceeds percentage change in price.
  • Price elasticity of demand (PED) = % change in QS / % change in price
  • Income elasticity of demand (YED) = % change in QS / % change in income
  • Income elasticity of demand measures how responsive consumer demand is to income changes, with positive values indicating that an increase in income leads to an increase in consumption.
  • % Change in QS = [(New QS - Old QS)/Old QS] * 100%
  • Income elasticity of demand measures how responsive consumer demand is to income levels, with positive values indicating that an increase in income leads to increased consumption.
  • % Change in QS = [(New QS - Old QS) / Old QS] * 100%
  • Cross-price elasticity of demand (XED) = % change in QS1 / % change in P2
  • % Change in price = [(New price - old price) / old price] * 100%
  • % Change in price = [(New price - old price)/old price] * 100%
  • If PED is less than 1, it means that the product is relatively inelastic as the percentage change in quantity demanded is smaller than the percentage change in price.
  • If PED is less than 1, it means that the product is relatively inelastic, meaning that there will be little effect on sales if prices increase slightly.
  • Economies of scale occur when increasing output results in lower costs per unit due to spreading fixed costs over more units produced.
  • Economies of scale occur when increasing output results in lower average costs due to spreading fixed costs over more units produced.
  • The law of diminishing marginal utility states that as consumption increases, additional units will bring less satisfaction.
  • Cross-price elasticity of demand (XED) = % change in QS / % change in Px
  • % Change in Price = [(New Price - Old Price)/Old Price] * 100%