Summary
Summary Formula Sheet Economic Principles in a Global Era EPGE
- Course
- Institution
All relevant formulas for Economic Principles in a Global Era, for chapter 1-13, 16, 17, 19-26, 28, 29
[Show more]
Seller
Follow
ribmoh27
Content preview
formulas)cost-benefit analysis: benefits – costs = net benefits
model + empirical evidence = hypothesis
Opportunity cost product A = Loss product B / Gain product A
marginal benefit per dollar spent: MBA / PA
optimizing buyer will choose: MBa / Pa = MBb / Pb
Consumer Surplus = ½ x (Base of triangle x Height of triangle)
Price elasticity of demand εD = % change in quantity demanded / % change in price
ELASTIC: if εD > 1 the % change in quantity demanded is greater than the % change in price
INELASTIC: if εD < 1 the % change in quantity demanded is lower than the % change in
price
UNIT ELASTIC: if εD = 1 the % change in price would leave revenues unchanged, because
the % change in quantity demanded moves in the same amount
PERFECTLY INELASTIC: the quantity demanded is completely unaffected by price
Cross-price Elasticity = % change in quantity demanded of good x / % change in price of
good y
NEGATIVE: the two goods are complements; the price fall of one leads to a right shift in the
demand curve for the other
POSITIVE: the two goods are substitutes; the rise in the price of one leads to a right shift in
the demand curve for the other
Income Elasticity = % change in quantity demanded / % change in income
normal goods = if the quantity demanded is directly related to income; when income rises,
consumers buy more of a normal good
inferior goods = if the quantity demanded is inversely related to income; when income rises,
consumers buy less of an inferior good
luxury goods = goods with an income elasticity >1
Total cost of production = Variable cost + Fixed cost
Average total cost = Average variable cost + Average fixed cost
(Total cost / Q) = (Variable cost / Q) + (Fixed cost / Q)
Marginal Cost = Change in total cost / Change in output
variable cost = change with the amount of production or amount of output
fixed cost = firms must pay FC even if production is equal to 0
Total revenue = Price x Quantity sold
Profits = Total revenues - Total costs
Marginal Revenue = Marginal Cost
Total profits = Price x Q – ATC x Q
= (Price – ATC) x Q
accounting profits = equal to total revenue – explicit costs
economic profits = total revenue – explicit costs – implicit costs
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ribmoh27. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.29. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
53340 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now