Notation: Δ means change; Q is quantity; P is price; subscripts distinguish cases. Use the stated period and units, retain useful working precision, and interpret the sign and size of the result. A formula calculation is evidence for an explanation, not a judgement by itself.
Use the formula that matches the variables in the question. Keep units and periods consistent; interpret the result in its context. Δ means change. These are core revision formulas; chapter explanations give the assumptions.
| Formula | Meaning and checks | Read more |
|---|---|---|
| Revenue TR = P × Q; AR = TR / Q; MR = ΔTR / ΔQ | TR is money; AR and MR are money per unit. Δ means change. Check: P is selling price and Q output sold. Revenue does not deduct any costs. | p. 19 |
| Total and average costs TC = TFC + TVC; AC = TC / Q = AFC + AVC | TC is money; average costs are money per unit. Check: Q is output over the stated period. Fixed cost per unit falls as Q rises even when total fixed cost is unchanged. | p. 23 |
| Marginal cost MC = ΔTC / ΔQ | Money per extra unit; use changes over the same output interval. Check: Δ is change. Divide by the whole change in Q if output changes by more than one unit. | p. 23 |
| Profit or loss TR − TC = (P − AC) × Q | Money; negative means loss. Use AC at the chosen Q. Check: Use average cost and price at the same chosen Q. Include normal profit within economic cost. | p. 33 |
| Concentration ratio sales of largest n firms / total market sales × 100 | Percent; use a consistent market definition and period. Check: Use market shares for the same market definition and period. The result indicates concentration, not proof of collusion. | p. 50 |
| Marginal revenue product MRP = MPP × MR | Money per extra worker per period; MR equals price only for a price taker. Check: MPP is extra physical output per worker; MR is extra product revenue per unit. Keep worker and output periods consistent. | p. 72 |
| Labour elasticity % change in labour demanded or supplied / % change in wage | No unit; state demand or supply. Use absolute demand elasticity for responsiveness. Check: Use percentage changes, not changes in headcount divided by money. Keep the sign when interpreting a demand relationship. | p. 72 |