# Shared Flashcard Set

## Details

Review 2 ECO2023
Flash Cards for second test
20
Economics
10/23/2012

Term
 Consumer Optimum
Definition
 A choice of a set of goods and services that maximizes the level of satisfaction for each consumer, subject to limited income.
Term
 Price Elasticity of Demand
Definition
 PED = P/Q X ∆Q/∆P Where Q = Quantity Demanded
Term
 Price Elasticity of Supply
Definition
 PES = P/Q X ∆Q/∆P Where Q = Quantity Supplied
Term
 Real Interest Rate
Definition
 Real Interest = Nominal interest - Expected Inflation
Term
 Cross Elasticity of Demand
Definition
 CED = P/Q X ∆Q/∆P Price of good A and Quantiy of Good B
Term
 Income Elasticity of Demand
Definition
 YED = Y/Q X ∆Q/∆YY= income. If the answer is negative you are dealing with an inferior good and if positive a normal good.
Term
 Marginal Utility
Definition
 MU = ∆ total utility/∆ number of Units consumed
Term
 Average Product
Definition
 APP = Total Product/ Labor
Term
 Marginal Product
Definition
 MPP = ∆ total Product/ ∆ Labor
Term
 Average Variable Cost
Definition
 AVC = Variable Cost/ Quantity Produced
Term
 Average Fixed Costs
Definition
 AFC = Fixed Cost/ Quantity Produced
Term
 Total Cost
Definition
 TC = Total Variable cost + Fixed cost
Term
 Average Total Cost
Definition
 ATC = Total Cost/Quantity Produced
Term
 Marginal Cost
Definition
 MC = ∆ Total Cost/ ∆ Quantity Produced
Term
 Variable Cost
Definition
 VC = number of variable Units X Cost per unit
Term
 Total Revenue
Definition
 TR = Price X Quantity
Term
 Profit
Definition
 Profit = Revenue- Total cost
Term
 Marginal Revenue (MR)
Definition
 MR = ∆TR/ ∆Qor the addition to total revenue/ addition to output
Term
 Profit Maximizing Rule
Definition
 TR = TC
Term
 Economic Profit π
Definition
 π = ∆TR - ∆TC/ ∆QEconomic Profit is change in total revenue subtracted change in total cost over change in Quantity
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