Principles of Microeconomics - 2e, 2014a

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Budget = P 1 × Q 1 + P 2 × Q 2
Budget = P 1 × Q 1 + P 2 × Q 2
$10 budget = $2 per burger × quantity of burgers + $0.50 per bus ticket × quantity of bus tickets
$10 = $2 × Q burgers + $0.50 × Q bus tickets
y = b + mx
$10 = $2 × Q burgers + $0.50 × Q bus tickets
2 × 10 = 2 × 2 × Q burgers + 2 × 0.5 × Q bus tickets
20 = 4 × Q burgers + 1 × Q bus tickets
20 – Q bus tickets = 4 × Q burgers
5 – 0.25 × Q bus tickets = Q burgers
or
Q burgers = 5 – 0.25 × Q bus tickets

% change in quantity > % change in price % change in quantity
% change in price
% change in quantity = % change in price % change in quantity
% change in price
% change in quantity < % change in price % change in quantity
% change in price
>1
=1

% change in quantity =
3,000 – 2,800
(3,000 + 2,800)/2 × 100
=
2,900 200 = 6.9
% change in price = 60–70
(60 + 70)/2 × 100
= –10
65 × 100
= –15.4
Price Elasticity of Demand =
–15.4%
6.9%
= 0.45
–15.4% 6.9%

Price Elasticity of Demand =
% change in quantity
% change in price
% change in quantity =
% change in price =
Q 2 –Q 1
⎛
⎝Q 2 +Q 1 )/2 × 100
P 2 –P 1
⎛
⎝P 2 +P 1 )/2 × 100
% change in quantity =
1,600 – 1,800
⎛
⎝1,600 + 1,800)/2 × 100
=
1,700 –200 = –11.76
% change in price = 130 – 120
(130 + 120)/2 × 100
=
125 10 = 8.0
% change in quantity
Price Elasticity of Demand =
% change in price
= –11.76
8
= 1.47

% change in quantity =
13,000 – 10,000
(13,000 + 10,000)/2 × 100
= 3,000
11,500 × 100
= 26.1
% change in price =
$700 – $650
⎛
⎝$700 + $650)/2 × 100
=
675 50 = 7.4
Price Elasticity of Supply = 26.1%
7.4%
= 3.53

% change in Qd > % change in P
% change in Qd = % change in P
% change in Qd < % change in P

Income elasticity of demand =
% change in quantity demanded
% change in income
Cross-price elasticity of demand =
% change in Qd of good A
% change in price of good B

Elasticity of labor supply =
% change in quantity of labor supplied
% change in wage
Elasticity of savings =
% change in quantity of financial savings
% change in interest rate
Income elasticity of demand =
% change in Qd
% change in income
Cross-price elasticity of demand =
% change in Qd of good A
% change in price of good B

Wage elasticity of labor supply =
Wage elasticity of labor demand =
Interest rate elasticity of savings =
% change in quantity of labor supplied
% change in wage
% change in quantity of labor demanded
% change in wage
% change in quantity of savings
% change in interest rate
Interest rate elasticity of borrowing =
% change in quantity of borrowing
% change in interest rate
–600,000/[(24 million + 24.6 million)/2]
=
$6/[($10 + $16)/2]
=
–600,000/24.3 million
$6/$13
= –0.025
0.46
= –0.05

MU =
change in total utility
change in quantity

marginal utility per dollar =
marginal utility
price
MU 1 = MU 2
P 1 P 2

22
$14 = 11
$7
1.6 = 1.6
MU
1 = MU 2
P 1 P 2
P 1 = MU 1
P 2 MU 2

MU 1
P 1
= MU 2
P 2

Profit = Total Revenue – Total Cost
Total Revenue = Price × Quantity

Office rental : $50,000
Law clerk's salary : ____________ +$35,000
Total explicit costs : $85,000
Revenues : $200,000
Explicit costs : ____________ –$85,000
Accounting profit : $115,000
Economic profit = total revenues – explicit costs – implicit costs
= $200,000 – $85,000 – $125,000
= –$10,000 per year

Q = f ⎡ ⎣NR, L, K, t, E ⎤ ⎦
Q = f ⎡ ⎣L, K ⎤ ⎦,

Q = f [L, K − ]orQ = f [L]
MP = ΔTP / ΔL

L = f ⎛ ⎝Q ⎞ ⎠

AC = TC/ Q
$44 / 2 = $22
MC = ΔTC / ΔQ
$44 − $32.50 = $11.50.

average profit =
profit
quantity produced
= total revenue – total cost
quantity produced
= total revenue
quantity produced – total cost
quantity produced
= average revenue – average cost

average revenue =
price × quantity produced
quantity produced
= price
average profit = price – average cost
Q = f ⎡ ⎣L, K ⎤ ⎦

2πr
πr 2

MC = ΔTC / ΔL
MP = ΔTP / ΔL

Profit = Total revenue − Total cost
= (Price)(Quantity produced) − (Average cost)(Quantity produced)

marginal revenue = price
marginal revenue =
change in total revenue
change in quantity

marginal cost =
change in total cost
change in quantity

profit = total revenue − total cost
= (85)($5.00) − (85)($3.50)
= $170
profit = (price – average cost) × quantity
= ($5.00 – $3.50) × 85
= $170
profit = total revenue – total cost
= (75)($2.75) – (75)($2.75)
= $0
profit = (price – average cost)×quantity
= ($2.75 – $2.75)×75
= $0
profit = (total revenue – total cost)
= (65)($2.00) – (65)($2.73)
= –$47.45
profit = (price – average cost) × quantity
= ($2.00 – $2.73) × 65
= –$47.45

profit = total revenue–(fixed costs + variable cost)
= 0 –$10,000
= –$10,000
profit = total revenue – (fixed costs + variable cost)
= $10,000 – ($10,000 + $15,000)
= –$15,000
profit = total revenue – (fixed costs + variable cost)
= $20,000 – ($10,000 + $15,000)
= –$5,000

MC =
change in total cost
change in quantity produced
MC =
$775 – $500
1
= $275

MR =
change in total revenue
change in quantity sold
MR =
$2200 – $1200
1
= $1000

Total damage = (60 × $100) + (30 × $1,000) + (10 × $15,000)
= $6,000 + $30,000 + $150,000
= $186,000

3, 000(1 + .07) 40 = $44,923

Future Value = Principal × (1 + interest rate) time

1 2
4

Qd T = 60 – P
Qs T = –5 + 1 4 P Qd J = 80 – P
Qs J
= –10 + 1 2 P

GPA = 0.25 × combined_SAT + 0.25 × class_attendance + 0.50 × hours_spent_studying

y = b + mx
y = 9 + 3x

= 0.100 – 0.307
= –0.207
= 6,000 – 4,000
= 2,000

Qd = 16 – 2P
Qs = 2 + 5P
Qd = Qs
Qd = Qs
16 – 2P = 2 + 5P
16 – 2P – 2 = 2 + 5P – 2
14 – 2P = 5P
14 – 2P + 2P = 5P + 2P
14 = 7P
14
7
= 7P
7
2 = P
Qd = 16 – 2P
= 16 – 2(2)
= 16 – 4
= 12
Qs = 2 + 5P
= 2 + 5(2)
= 2 + 10
= 12

Percentage change =
Change in quantity
Quantity
=
$1.03 trillion – $1.00 trillion
($1.03 trillion + $1.00 trillion) / 2
= 0.03
1.015
= 0.0296
= 2.96% growth

Present discounted value =
Future value received years in the future
numbers of years t
(1 + Interest rate)

% change in quantity = 2600 – 2800
(2600 + 2800) ÷2 × 100
= –200
2700 × 100
= –7.41
% change in price = 80–70
(80 + 70) ÷2 × 100
= 10
75 × 100
= 13.33
Elasticity of Demand = –7.41%
13.33%
= 0.56
% change in quantity = 2200 – 2400
(2200 + 2400) ÷2 × 100
= –200
2300 × 100
= –8.7
% change in price = 100–90
(100 + 90) ÷2 × 100
= 10
95 × 100
= 10.53
Elasticity of Demand =
10.53%
–8.7%
= 0.83
% change in quantity = 1600 – 1800× 100
1700
= –200
1700 × 100
= –11.76
% change in price = 130 – 120× 100
125
=
125 10 = 8.00
Elasticity of Demand = –11.76%
8.00%
= –1.47

% change in quantity = 70–50
(70 + 50) ÷2 × 100
= 20
60 × 100
= 33.33
% change in price =
$9–$8
($9 + $8) ÷2 × 100
= 1
8.5 × 100
= 11.76
Elasticity of Supply = 33.33%
11.76%
= 2.83
% change in quantity = 88–80
(88 + 80) ÷2 × 100
=
84 8 × 100
= 9.52
%change in price =
$11 – $10
($11 + $10) ÷2 × 100
= 1
10.5 × 100
= 9.52
Elasticity of Demand = 9.52%
9.52%
= 1.0
% change in quantity = 100–95
(100 + 95) ÷2 ×100
= 5
97.5 ×100
= 5.13
% change in price =
$13 – $12
($13 + $12) ÷2 × 100
= 1
12.5 × 100
= 8.0
Elasticity of Supply = 5.13%
8.0%
= 0.64

Percentage change in quantity demanded = [(change in quantity)/(original quantity)] × 100
= [22 – 30]/[(22 + 30)/2] × 100
= –8/26 × 100
= –30.77
Percentage change in income = [(change in income)/(original income)] × 100
= [38,000 – 25,000]/[(38,000 + 25,000)/2] × 100
= 13/31.5 × 100
= 41.27
Budget = P RT × Q RT + P PC × Q PC
$10 = $2 × Q RT + $.05 × Q PC
$10
$.05 = $2Q RT + $.05Q PC
$.05
200 = 40Q RT + Q PC
Q PC = 200 - 40Q RT