Midpoint formula The elasticity $$\epsilon$$ can be calculated using the midpoint formula: $$\epsilon = 100*\frac{\frac{Q_1 – Q_0}{\bar{Q}}}{ \frac{P_1 – P_0}{\bar{P}}}$$…

## Cobb-Douglas function

tThe Cobb-Douglas function is used to measure consumers preferences between different bundles of goods or how a firm can combine…

## Consumer, producer and total surplus

Producer surplus from supply scheduleCalculate producer surplus from supply curve Consumer and producer are both economic measures of welfare. Consumer…

## Consumer Price Index (CPI) and inflation rate formula

Consumer price index formulaCalculate CPI with one goodCalculate CPI with two goodsInflation rate formulaCalculate inflation rate with one goodCalculate inflation…

## Isoquant and isocost line

The isocost and isoquant line are used to determine the cost minimising level of output produced by a competitive firm.…

## What happens to demand when income increases?

Use a supply and demand graph to illustrate the effects that an increase in income. What happens to the quantity…

## Expansionary and Contractionary Monetary Policy

Expansionary monetary policy Expansionary monetary policies is the act of increasing the money supply so that the interest rate goes…

## Commodity money v Fiat Money

Commodity money is a currency where the value of money is determined based on the value of the material in…

## Supply and demand model with imports

In this post, using supply and demand analysis, I consider what happens to output and prices when a country transitions…

## How to derive labor supply function

Suppose a worker has the utility function $$U = L^\alpha C ^{(1-\alpha)}$$ where $$L$$ describes leisure hours and $$C$$ is…