Formulas for economics play an important role in all the students’ education. However, one of the significant responsibilities in economics is the assessment of the options to decide what valid contents are given purposes or intentions. In order to do this, it is usually beneficial to ascertain reasons and influence associations, and to quantify variables. Economics is a strong device that supports both of these tasks. It is difficult to perform economic analysis without some rudimentary knowledge of the fundamentals.
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Economics is an accurate language that is helpful in articulating the causal associations between associated variables. When decisions are taken about the distribution of resources, it is beneficial to be able to articulate how a difference in one input will modify the result and conclusively change the utility of individuals.
| Important Formulas for Economics |
\(\begin{array}{l}Average\, Total\, Cost\, (ATC)\, =\, \frac{Total\, Cost}{Q}\end{array} \) |
| Average Variable Cost = Total Variable Cost / Quantity of Output produced or AVC = TVC/Q |
| Fixed Cost (AFC) = ATC – AVC |
\(\begin{array}{l}Total \, Cost \, (TC) =\, \left (AVC + AFC\right ) \times Output\end{array} \) |
\(\begin{array}{l}Total\, Variable\, Cost \, (TVC) = AVC \times Output\end{array} \) |
| Total Fixed Cost (TFC) = TC – TVC |
\(\begin{array}{l}Marginal\, Cost (MC) = \frac{Change\, in \, Total \, Costs}{Change\, in \, Output}\end{array} \) |
\(\begin{array}{l}Marginal\, Product \, (MP) = \frac{Change\, in\, Total \, Product}{Change\, in\, Variable\, Factor}\end{array} \) |
\(\begin{array}{l}Marginal\, Revenue \, (MR) = \frac{Change\, in\, Total \, Revenue}{Change\, in \, Q}\end{array} \) |
\(\begin{array}{l}Average \, Product \, (AP) =\frac{TP}{Variable\, Factor}\end{array} \) |
\(\begin{array}{l}Total\, Revenue\, (TR) = Price \times Quantity\end{array} \) |
\(\begin{array}{l}Average\, Revenue\, (AR) = \frac{TR}{Output}\end{array} \) |
\(\begin{array}{l}Total\, Product (TP) = AP \times Variable\, Factor\end{array} \) |
| Economic Profit = TR – TC > 0 |
| A Loss = TR – TC < 0 |
| Break even point = AR = ATC |
| Profit maximizing condition = MR = MC |
| Explicit Costs = Payments to non-owners of the firm for the resources they supply |
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