Linear & Non-Linear Equations

Line: y=ax+b [1 Point] / = [2 Points]

If >0: =

Parabola: ax2+bx+c / Vertex: = 2

[2 Real Solutions]

If =0: = 2
[1 Solution]
2
If <0: =b -4ac [No Solution]
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Supply & Demand Equations

S=D
Pd=Ps=P Qd=Qs=Q
Consumer Extra Pay (CEP): CEP=PAfter-PBefore
Supplier Extra Pay (SEP): SEP=Tax-CEP / Tax=%TaxPBefore
Government Tax Revenue (GTR): GTR=TaxQAfter
Superior Goods: Y Inc, Q Inc / Inferior Goods: Y Inc, Q Dec
Substitutable Goods: PA Inc, Q Inc / Complementary Goods: PA Inc, Q Dec
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National Income Determination

Income: Y=C+S S=I [Commodities Market]
Income with Tax: Yd=Y-T C=aYd+b
Md=Ms=L1+L2 [Money Market]
Money Supply is Always Fixed
Money Demand: L1=K1y / L2=K2r+K3
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Profit Analysis & Marginal Functions

=TR-TC
TR=PQ
TVC=VCQ

>0, =10
<0, =-10
=0, Breakeven

MR=TR/Q=TR
MC=TC/Q=TC
MR+MC=1

MPS=S/Y=S
MPC=C/Y=C
MPS+MPC=1

TC=ACQ
Max/Min: = 2
M=/Q=
MPL=Q/L=Q
TC=FC+TVC
M=MR-MC
TC=FC+VCQ
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Homogenous Functions
L>L
Q=f(K,L)

K>K
QNew=f(K,L)

DoH is >1: Increasing Return to Scale

DoH is <1: Decreasing Return to Scale
DoH is =1: Constant Return to Scale

Logarithm Functions
Log/Ln(xy)=Log/Ln(x)+Log/Ln(y)

Log/Ln()=Log/Ln(x)-Log/Ln(y)

Log/Ln(x)n=nLog/Ln(x)
Log/Ln(1)=0 / Log 10=1 / Lne=1
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Percentages
%

New Price=Old Price + Old Price x

100

/ New Price=Old Price x SF

Scale Factor (SF): SF=1 + 100 [Increase] / SF= 1 100 [Decrease]

Interest Rate: PNew-POld / r=(SF1-1)x100 [Increase] / r=(1-SF1)x100 [Decrease]

POld
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Compound Interest

Time Period Compounding: = (1 + 100)

Annual Compounding: = / =

Semi-Annual Compounding: = / = 2

Quarterly Compounding: = 4 / = 4

Monthly Compounding: = 12 / = 12

Continuous Compounding: = 100 / = / = 1

APR in Time Period: (1 +
APR in Perpetuity: (1 +

) = (1 + 100) / = / = (1)

100

100

) = ( 100) / = / = (1)

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Savings & Annuity

Savings: = (

Annuity: = 1 ( 1 1 )

= 1 + 100 / = / =
= 1 + 100 / = / =

Investment Appraisal

Present Value of a Principal: = (1 + 100)

Net Present Value (NPV): Present Value Initial Value

NPV>0 [Good Investment] / NPV<0 [Bad Investment]

Internal Rate of Return (IRR): = (1 + 100)

IRR>Market Rate [Good Project] / IRR<Market Rate [Bad Project]

Always Use NPV When Comparing Two Projects
Never Use IRR to Compare Two Projects Since IRR Depends on the Amounts Invested
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Elasticity
ED=-1P / ES=1P
PQ
PQ

If E>1 [Price Is Elastic]

If E<1 [Price Is Inelastic]
If E=1 [Price Is Unit Elastic]

ED=-%change in demand / ES=%change in supply

%change in price
%change in price
ED=-QP / ES=QP
ED=-QP / ES=QP
P Q
P Q
1 Q
1 Q
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Properties Of Derivatives
f(x)=k / f(x)=0
f(x)=kx+b / f(x)=k

f(x)=(uv) / f(x)=uv
f(x)=(uv) / f(x)=uv+vu

f(x)=xn / f(x)=nxn-1
f(x)=(u/v) / f(x)= 2
x
x
f(x)=e / f(x)=e
f(x)=eu / f(x)=ueu
f(x)=Lnx / f(x)=1/x
f(x)=un / f(x)=nun-1u
f(x)=Lnu / f(x)=u/u
f(x)=ax2+bx+c / f(x)=2ax+b=0
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Definite/Indefinite Integrals
xndx=xn+1+k
n+1
kx
e dx=(1/k)ekx+k

TR=MRdQ
TC=MCdQ
=TR-TC

C=MPCdY
S=MPSdY
Y=C+S

(1/x)dx=Lnx+k

Q=MPLdL

(b)-f(a)

kf(x)dx=kf(x)dx
[f(x)g(x)]dx=f(x)dxg(x)dx

CS= 0 0 DdQ-P0Q0

PS=P0Q0- 0 0 sdQ