International Baccalaureate
Economics
Formula Booklet
2016 Economics — Microeconomics 6 Macroeconomics
𝑄 = 𝑚𝑥 + 𝑐
%∆𝑄𝐷
𝑃𝐸𝐷 =
%∆𝑃
%∆QD
%∆P
%∆𝑄𝑆
𝑃𝐸𝑆 =
%∆𝑃
%∆QS
%∆P
%∆𝑄𝐷
𝑌𝐸𝐷 =
%∆𝑌
%∆QD
%∆Y
%∆𝑄𝐴
𝑋𝐸𝐷 =
%∆𝑃𝐵
%∆QA
%∆PB
𝑃𝑟𝑜𝑓𝑖𝑡 = 𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡
𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 = 𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠 + 𝑇𝑜𝑡𝑎𝑙 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
𝑇𝑜𝑡𝑎𝑙 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦
𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠 =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠 + 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡𝑠
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑃𝑟𝑖𝑐𝑒 × 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦
𝑇𝑜𝑡𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 =
𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝐷𝑒𝑚𝑎𝑛𝑑 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑃𝑟𝑖𝑐𝑒
𝐷𝑒𝑚𝑎𝑛𝑑 = 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑃𝑟𝑖𝑐𝑒
𝑇𝑅 𝑖𝑠 𝑚𝑎𝑥𝑖𝑚𝑖𝑠𝑒𝑑 𝑤ℎ𝑒𝑛 𝑀𝑅 = 0
𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑥𝑖𝑚𝑖𝑠𝑎𝑡𝑖𝑜𝑛 @ 𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 = 𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝐶𝑜𝑠𝑡
𝑜𝑟
𝑊ℎ𝑒𝑛 𝑡ℎ𝑒 𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑇𝑅 𝑎𝑛𝑑 𝑇𝐶 𝑖𝑠 𝑎𝑡 𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑡ℎ𝑒𝑛 𝑝𝑟𝑜𝑓𝑖𝑡 𝑚𝑎𝑥𝑖𝑚𝑖𝑠𝑎𝑡𝑖𝑜𝑛 𝑖𝑠 𝑎𝑐ℎ𝑖𝑒𝑣𝑒
𝐵𝑟𝑒𝑎𝑘 𝐸𝑣𝑒𝑛 𝑃𝑜𝑖𝑛𝑡 @ 𝑇𝑅 = 𝑇𝐶
𝑊ℎ𝑒𝑛 𝑇𝑅 > 𝑇𝐶 𝑡ℎ𝑒𝑟𝑒 𝑖𝑠 𝑎 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 𝑔𝑒𝑛𝑒𝑟𝑎𝑡𝑒𝑑
𝑆ℎ𝑢𝑡 𝐷𝑜𝑤𝑛 𝑂𝑐𝑐𝑢𝑟𝑠 @ 𝑃𝑟𝑖𝑐𝑒 < 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 𝑜𝑟 @ 𝐸𝑐𝑜𝑛. 𝐿𝑜𝑠𝑠 > 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡𝑠
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑒 𝐸𝑓𝑓𝑖𝑐𝑒𝑛𝑐𝑦 @ 𝑃𝑟𝑖𝑐𝑒 = 𝑚𝑖𝑛𝑖𝑚𝑢𝑚 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡
𝐴𝑙𝑙𝑜𝑐𝑎𝑡𝑖𝑣𝑒 𝐸𝑓𝑓𝑖𝑐𝑒𝑛𝑐𝑦 @ 𝑃𝑟𝑖𝑐𝑒 = 𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝐶𝑜𝑠𝑡 𝑜𝑟 @ 𝑀𝑆𝐵 = 𝑀𝑆𝐶
𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑀𝐴𝑋 @ 𝑀𝑅 = 0
𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑒 𝐸𝑓𝑓𝑖𝑐𝑒𝑛𝑐𝑦 @ 𝑃𝑟𝑖𝑐𝑒 = 𝐴𝑇𝐶𝑀𝐼𝑁𝐼𝑀𝑈𝑀
∆𝑇𝑃
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑃𝑟𝑜𝑓𝑖𝑡 =
∆𝑄𝐿
∆TP
∆QL
𝑇𝑃
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑜𝑑𝑢𝑐𝑡𝑖𝑜𝑛 =
𝑄𝐿
QL
∆𝑇𝐶
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝐶𝑜𝑠𝑡 =
∆𝑄
∆𝑇𝐶
∆𝑄
∆𝑇𝑅
𝑀𝑎𝑟𝑔𝑖𝑛𝑎𝑙 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 =
∆𝑄
∆𝑇𝑅
∆𝑄
𝑇𝑜𝑡𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡
𝐿𝑎𝑏𝑜𝑢𝑟 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 =
𝑇𝑜𝑡𝑎𝑙 𝐿𝑎𝑏𝑜𝑢𝑟
𝐺𝐷𝑃 = 𝐶 + 𝐼 + 𝐺 + (𝑋 − 𝑀)
𝐺𝑁𝑃 = 𝐺𝐷𝑃 + 𝑁𝑒𝑡 𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦 𝐼𝑛𝑐𝑜𝑚𝑒 𝐹𝑜𝑟𝑚 𝐴𝑏𝑟𝑜𝑎𝑑
𝑁𝑒𝑡 𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 = 𝐺𝑟𝑜𝑠𝑠 𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡 − 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛
𝐺𝐷𝑃
𝐺𝐷𝑃 𝑃𝑒𝑟 𝐶𝑎𝑝𝑖𝑡𝑎 =
𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝐺𝐷𝑃
𝑅𝑒𝑎𝑙 𝐺𝐷𝑃 = × 100
𝐺𝐷𝑃 𝐷𝑒𝑓𝑙𝑎𝑡𝑜𝑟
𝑁𝑒𝑤 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑥 − 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑥
𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑥 =
𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑥
𝐿𝑒𝑣𝑒𝑙 𝑜𝑓 𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑟𝑜𝑝𝑒𝑛𝑠𝑖𝑡𝑦 𝑡𝑜 𝐶𝑜𝑛𝑠𝑢𝑚𝑒 =
𝐿𝑒𝑣𝑒𝑙 𝑜𝑓 𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒
𝑆𝑎𝑣𝑖𝑛𝑔𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑟𝑜𝑝𝑒𝑛𝑠𝑖𝑡𝑦 𝑡𝑜 𝑆𝑎𝑣𝑒 =
𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒
𝑇𝑎𝑥𝑎𝑡𝑖𝑜𝑛 𝐶𝑜𝑙𝑙𝑒𝑐𝑡𝑒𝑑
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑒 𝑜𝑓 𝑇𝑎𝑥𝑎𝑡𝑖𝑜𝑛 =
𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒
𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 𝑜𝑓 𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒 𝑆𝑝𝑒𝑛𝑡 𝑜𝑛 𝐼𝑚𝑝𝑜𝑟𝑡𝑠
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑃𝑟𝑜𝑝𝑒𝑛𝑠𝑖𝑡𝑦 𝑡𝑜 𝐼𝑚𝑝𝑜𝑟𝑡 =
𝑁𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐼𝑛𝑐𝑜𝑚𝑒
𝐴𝑃𝐶 + 𝐴𝑃𝑆 + 𝐴𝑅𝑇 + 𝐴𝑃𝑀 = 1
∆𝐶
𝑀𝑃𝐶 =
∆𝑌
∆𝑀
𝑀𝑃𝑀 =
∆𝑌
∆𝑆
𝑀𝑃𝑆 =
∆𝑌
∆𝑇
𝑀𝑃𝑇 =
∆𝑌
𝑀𝑅𝐿 = 𝑀𝑃𝑆 + 𝑀𝑃𝑇 + 𝑀𝑃𝑀
1 1
𝑘= =
1− 𝑀𝑅𝐿
𝑀𝑃𝐶
∆𝐺𝐷𝑃 = 𝑘 × ∆𝐸
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡
𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝑅𝑎𝑡𝑒 = × 100
𝐿𝑎𝑏𝑜𝑢𝑟 𝐹𝑜𝑟𝑐𝑒
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝐵𝑎𝑠𝑘𝑒𝑡 𝑀𝑜𝑛𝑡ℎ 𝑎
𝐶𝑃𝐼 =
𝑃𝑟𝑖𝑐𝑒 𝑜𝑓 𝐵𝑎𝑠𝑘𝑒𝑡 𝑀𝑜𝑛𝑡ℎ 𝑏
%∆𝐶𝑃𝐼 = %∆𝑃𝐶(𝑤𝑒𝑖𝑔ℎ𝑡 × 0.01)
𝐶𝑃𝐼2 − 𝐶𝑃𝐼1
𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 𝑅𝑎𝑡𝑒 = × 100
𝐶𝑃𝐼1
𝑌𝑁
𝑌𝑅 =
𝐶𝑃𝐼 × 0.01
𝐼𝑅𝑅 = 𝐼𝑅𝑁 − 𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛
𝐼𝑅𝑁 = 𝐼𝑅𝑅 + 𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 𝑃𝑟𝑒𝑚𝑖𝑢𝑚
𝐺𝐷𝑃2 − 𝐺𝐷𝑃1
𝐺𝑅 = × 100
𝐺𝐷𝑃1
𝐺𝐷𝑃𝑁𝑂𝑀𝐼𝑁𝐴𝐿
𝐺𝐷𝑃𝑅𝐸𝐴𝐿 =
𝐶𝑃𝐼 × 0.01
𝐴
𝐺𝑖𝑛𝑖 𝐶𝑜𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑡 =
𝐴+𝐵
∆𝑡
𝑀𝑅𝑇 =
∆𝑌𝐺
∆𝑡
∆𝑌𝐺
𝑡
𝐴𝑅𝑇 𝑎
