AP Microeconomics Formulas & Equations

Q: Tax revenue =

(P|Tax - P seller receives) × Q

question

Total revenue =

answer

P × Q

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Coefficient of price elasticity of demand =

answer

%∆Qd/%∆P

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Demand is elastic when

answer

|CoPED| > 1

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Demand is inelastic when

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|CoPED| < 1

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Demand is unit elastic when

answer

|CoPED| = 1

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Demand is perfectly elastic when

answer

|CoPED| = ∞

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Demand is perfectly inelastic when

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|CoPED| = 0

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Cross elasticity of demand =

answer

%∆Qa/%∆Pb

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Items substitute for each other when

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CoCED > 0

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Items complement each other when

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CoCED < 0

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Income elasticity of demand =

answer

%∆Qd/%∆i

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It's a normal good when its

answer

CoIED > 0

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It's an inferior good when its

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CoIED < 0

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Elasticity of supply =

answer

%∆Qs/%∆P

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Tax revenue =

answer

(P|Tax - P seller receives) × Q

question

Utilities are maximized when

answer

MUa/UCa = MUb/UCb

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Average revenue =

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TR/Qo

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Marginal revenue =

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∆TR/∆Qo

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TR is maximized when

answer

MR < 0

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MR = D = AR = P in

answer

perfect competition

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Individual seller price = market price in

answer

perfect competition

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MR < P in

answer

imperfect competition

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An individual seller IS THE MARKET in

answer

imperfect competition

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Total cost =

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UC × Qo

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Average fixed cost =

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TFC/Qo

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Average variable cost

answer

TVS/Qo

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Average total cost =

answer

TC/Qo

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Marginal cost =

answer

∆TC/∆Qo

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Average product =

answer

TP/Qi

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Marginal product =

answer

∆TP/∆Qi

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Total product is maximized when

answer

MR < 0

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In perfect competition market supply =

answer

∑ mc's

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In all markets, profit is maximized when

answer

MC = MR

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Total revenue =

answer

TC + TP

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Total cost =

answer

UC × Q

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Total profit =

answer

UP × Q

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Marginal revenue product =

answer

∆TR/∆Q

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Marginal resource cost

answer

∆TCr/∆Qr

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When a single resource is being purchased, profit is maximized when

answer

MRP = MRC

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In perfect competition market demand for labor =

answer

∑ mrp's

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In perfect competition, MRP =

answer

Pproduct × Mproduct

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In imperfect competition, MRP =

answer

(Pproduct × Mproduct) − ∆P on previous units sold

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The Least Cost Rule states that costs are minimized when MPL/UPL =

answer

MPK/UPC

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And profits are maximized when

answer

MPL/UPL = MPK/UPC = 1

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Market equilibrium w/ externalities is reached when

answer

Marginal social cost = marginal social benefit

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It's a negative production externality when

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social cost > private cost

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It's a positive production externality when

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social cost < private cost

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It's a negative consumption externality when

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social benefit < private benefit

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It's a positive consumption externality when

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social benefit > private benefit

1 of 49

question

Total revenue =

answer

P × Q

question

Coefficient of price elasticity of demand =

answer

%∆Qd/%∆P

question

Demand is elastic when

answer

|CoPED| > 1

question

Demand is inelastic when

answer

|CoPED| < 1

question

Demand is unit elastic when

answer

|CoPED| = 1

question

Demand is perfectly elastic when

answer

|CoPED| = ∞

question

Demand is perfectly inelastic when

answer

|CoPED| = 0

question

Cross elasticity of demand =

answer

%∆Qa/%∆Pb

question

Items substitute for each other when

answer

CoCED > 0

question

Items complement each other when

answer

CoCED < 0

question

Income elasticity of demand =

answer

%∆Qd/%∆i

question

It's a normal good when its

answer

CoIED > 0

question

It's an inferior good when its

answer

CoIED < 0

question

Elasticity of supply =

answer

%∆Qs/%∆P

question

Tax revenue =

answer

(P|Tax - P seller receives) × Q

question

Utilities are maximized when

answer

MUa/UCa = MUb/UCb

question

Average revenue =

answer

TR/Qo

question

Marginal revenue =

answer

∆TR/∆Qo

question

TR is maximized when

answer

MR < 0

question

MR = D = AR = P in

answer

perfect competition

question

Individual seller price = market price in

answer

perfect competition

question

MR < P in

answer

imperfect competition

question

An individual seller IS THE MARKET in

answer

imperfect competition

question

Total cost =

answer

UC × Qo

question

Average fixed cost =

answer

TFC/Qo

question

Average variable cost

answer

TVS/Qo

question

Average total cost =

answer

TC/Qo

question

Marginal cost =

answer

∆TC/∆Qo

question

Average product =

answer

TP/Qi

question

Marginal product =

answer

∆TP/∆Qi

question

Total product is maximized when

answer

MR < 0

question

In perfect competition market supply =

answer

∑ mc's

question

In all markets, profit is maximized when

answer

MC = MR

question

Total revenue =

answer

TC + TP

question

Total cost =

answer

UC × Q

question

Total profit =

answer

UP × Q

question

Marginal revenue product =

answer

∆TR/∆Q

question

Marginal resource cost

answer

∆TCr/∆Qr

question

When a single resource is being purchased, profit is maximized when

answer

MRP = MRC

question

In perfect competition market demand for labor =

answer

∑ mrp's

question

In perfect competition, MRP =

answer

Pproduct × Mproduct

question

In imperfect competition, MRP =

answer

(Pproduct × Mproduct) − ∆P on previous units sold

question

The Least Cost Rule states that costs are minimized when MPL/UPL =

answer

MPK/UPC

question

And profits are maximized when

answer

MPL/UPL = MPK/UPC = 1

question

Market equilibrium w/ externalities is reached when

answer

Marginal social cost = marginal social benefit

question

It's a negative production externality when

answer

social cost > private cost

question

It's a positive production externality when

answer

social cost < private cost

question

It's a negative consumption externality when

answer

social benefit < private benefit

question

It's a positive consumption externality when

answer

social benefit > private benefit

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