Term
|
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
|
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/∆Y
Y= income. If the answer is negative you are dealing with an inferior good and if positive a normal good. |
|
|
Term
|
Definition
| MU = ∆ total utility/∆ number of Units consumed |
|
|
Term
|
Definition
| APP = Total Product/ Labor |
|
|
Term
|
Definition
| MPP = ∆ total Product/ ∆ Labor |
|
|
Term
|
Definition
| AVC = Variable Cost/ Quantity Produced |
|
|
Term
|
Definition
| AFC = Fixed Cost/ Quantity Produced |
|
|
Term
|
Definition
| TC = Total Variable cost + Fixed cost |
|
|
Term
|
Definition
| ATC = Total Cost/Quantity Produced |
|
|
Term
|
Definition
| MC = ∆ Total Cost/ ∆ Quantity Produced |
|
|
Term
|
Definition
| VC = number of variable Units X Cost per unit |
|
|
Term
|
Definition
|
|
Term
|
Definition
| Profit = Revenue- Total cost |
|
|
Term
|
Definition
MR = ∆TR/ ∆Q
or the addition to total revenue/ addition to output |
|
|
Term
|
Definition
|
|
Term
|
Definition
π = ∆TR - ∆TC/ ∆Q
Economic Profit is change in total revenue subtracted change in total cost over change in Quantity |
|
|
