5 Steps to a 5 AP Microeconomics, 2014-2015 Edition

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Important Formulas and Conditions

AND CONDITIONS

Chapter 5

1. Optimal Decision-Making: MB =MC


2. Opportunity Cost from a Production Possibility
   Frontier (PPF):

Good X: The slope of the PPF

Good Y : The inverse of the slope of the PPF

Chapter 6

1. Market Equilibrium:

Qd=Qs

2. Shortage:

Qd– Qs

3. Surplus:

Qs– Qd

4. Total Welfare:

=Consumer surplus +Producer surplus

Chapter 7

1. Price Elasticity of Demand:

Ed=(%Din quantity demanded of good X)/

(%Din the price of good X)

2. Percentage change:

%D= 100 ¥ (New value – Old value)/

Old value

3. Total Revenue:

=Price ¥Quantity demanded

4. Income Elasticity:

EI=(%DQdgood X)/(%Dincome)

5. Cross-Price Elasticity:

Ex,y=(%DQdgood X)/(%Dprice good Y)

6. Price Elasticity of Supply:
   Es=(%Din quantity supplied of good X)/
   (%Din the price of good X)


7. Marginal Utility:
   MU =DTU/DQ


8. Utility Maximizing Rule:
   MUx/Px=MUy/Pyor MUx/MUy=Px/Py


9. Revenue from a Tariff:
   =Per Unit Tariff ¥Units Imported

Chapter 8

1. Accounting Profit:
   TR – Explicit costs


2. Economic Profit:
   TR – Explicit costs – Implicit costs


3. Marginal Product of Labor:
   MPL=Din TPL/Din L


4. Average Product of Labor:
   APL=TPL/L


5. Total Costs:
   TC =TVC +TFC


6. Marginal Costs:
   MC =DTVC/DQ


7. Average Fixed Cost:
   AFC =TFC/Q


8. Average Variable Cost:
   AVC =TVC/Q


9. Average Total Cost:
   ATC =TC/Q=AFC +AVC


10. Marginal Cost and Marginal Product of
    Labor:
    MC =w/MPL