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 MPPx=MPPL
PX PL
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)
