Formula

Question 1

MPL

Answer 1

Marginal product of labour - additional output produced by employing one more unit of labour, ceteris paribud
Change in output / change in labour

Question 2

APL

Answer 2

Average product of labour - output produced per unit of labour
APL = Q/L

Question 3

MRT

Answer 3

Marginal rate of of transformation - the rate at which one good must be given up to produce one more unit of another good (opportunity cost)
It’s the slope of the PPF
MRT = unit of good x forgone / units of good y gained

Question 4

MRS

Answer 4

Marginal rate of substitution - consumers willingness to substitute one good for another without changing their level of satisfaction
MRS = MU x / MU y
Is the slope of the indifference curve

Question 5

Gini coefficient

Answer 5

Measure how unequal the distribution of income / wealth is within a pop
0 = perfect equality
G = A / A+B
A = area between line of perfect equality and Lorenz curve

Question 6

PED

Answer 6

% change in QD / % change in price
Elastic = >1
Inelastic = <1
Unit elastic = 1

Question 7

Utility function

Answer 7

Represents a consumers preferences (assigned numerical value - higher = higher satisfaction)
U = U(x,y)
Cobb Douglas utility

Question 8

YED

Answer 8

% change in QD / % change in income
Normal = >0
Inferior = <0
Elastic = >1
Inelastic = 0<YED<1

Question 9

XED

Answer 9

% change in QD of good A / % change in price of good B
Substitutes = >0
Complements = <0
Unrelated = 0

Question 10

PES

Answer 10

% change in QS / % change in price
Elastic = >1
Inelastic = <1
Unit elastic = 1

Question 11

Marginal utility

Answer 11

Additional satisfaction gained from consuming one extra unit of a good
MUx = derivative of U/ derivative of x