Revenue | Calculation |
---|---|
Total revenue (TR) | Price times quantity (P × Q), or the sum of individual units sold times their respective prices; ∑(Pi × Qi) |
Average revenue (AR) | Total revenue divided by quantity; (TR / Q) |
Marginal revenue (MR) | Change in total revenue divided by change in quantity; (ΔTR / ΔQ) |
Costs | Calculation |
---|---|
Total fixed cost (TFC) | Sum of all fixed expenses; here defined to include all opportunity costs |
Total variable cost (TVC) | Sum of all variable expenses, or per unit variable cost times quantity; (per unit VC × Q) |
Total costs (TC) | Total fixed cost plus total variable cost; (TFC + TVC) |
Average fixed cost (AFC ) | Total fixed cost divided by quantity; (TFC / Q) |
Average variable cost (AVC) | Total variable cost divided by quantity; (TVC / Q) |
Average total cost (ATC) | Total cost divided by quantity; (TC / Q) or (AFC + AVC) |
Marginal cost (MC) | Change in total cost divided by change in quantity; (ΔTC / ΔQ) |
$Y$ = Aggregate output
$L$ = Quantity of labor
$K$ = Quantity of capital
$A$ = Technological knowledge or total factor productivity (TFP)$ $
Potential GDP = Aggregate hours × Labor productivity
This equation can be expressed in terms of growth rates as:
Potential GDP growth rate = | Long-term growth rate of labor force + Long-term labor productivity growth rate |
$ULC =W\/O$
Where:
$O$ = Output per hour per worker
$W$= Total labor compensation per hour per worker
Required reserve ratio = Required reserves / Total deposits
Money multiplier = 1/ (Reserve requirement)
The Fischer effect states that the nominal interest rate ($R_N$) reflects the real interest rate ($R_R$)
and the expected rate of inflation ($∏^e$).
$R_N = R_R + ∏ ^e$
$ $Ignoring taxes, the multiplier can also be calculated as:
1/(1-MPC) = 1/(1-0.9) = 10Assuming taxes, the multiplier can also be calculated as:
$1 / [1 -\text"MPC"(1-t)]$ $ $A country's balance of payments is composed of three main accounts.
Real exchange rate$_{DC\/FC} = S_{DC\/FC} × (P_{FC} \/ P_{DC})$
where:
$S_{DC\/FC}$ = Nominal spot exchange rate
$P_{FC}$ = Foreign price level quoted in terms of the foreign currency
$P_{DC}$ = Domestic price level quoted in terms of the domestic currency
Forward rates are sometimes interpreted as expected future spot rates.
$F_t = S_{t+1}$
$(S_{t+1}) / S - 1 = {Δ%S(DC\/FC)}_{t+1} = {(r_{DC} + r_{FC}) / (1 + r_{FC})}$ $Where:
ϖX = Share of exports in total trade
ϖM = Share of imports in total trade
εX = Price elasticity of demand for exports
εM = Price elasticity of demand for imports$ $