Economic Formulas | Formulas Used in Economic Science
Economics is a social science that deals with how people use
and distribute resources. Economists use various formulas to analyze and
predict economic events. These formulas express economic concepts
mathematically and show economic relations. In this article, we will introduce
some basic formulas used in economics.
1. Income Formula: Income is the total money earned from the
sale of a good or service. The income formula is:
Revenue = Price x Quantity
This formula shows that the product of the price of a good
or service times the quantity sold is equal to revenue.
2. Profit Formula: Profit is money obtained by subtracting
cost from revenue. The snow formula is:
Profit = Revenue - Cost
This formula shows that revenue minus cost equals profit.
3. Elasticity Formula: Elasticity measures the sensitivity
of one variable to another variable. The elasticity formula is:
Elasticity = (Percentage Change of a Variable) / (Percentage
Change of Another Variable)
This formula shows that the percent change of one variable
divided by the percent change of another variable equals elasticity.
4. Supply Formula: Supply is the amount of producers willing
to produce and sell a good or service. The supply formula is:
Supply = a + b x Price
This formula shows that supply is equal to the sum of a
constant term (a) times the price coefficient (b).
5. Demand Formula: Demand is the amount of consumers willing
to buy a good or service. The demand formula is:
Demand = c - d x Price
This formula shows that demand equals a constant term (c)
times the price multiplied by the coefficient (d).
In this article, we have introduced some basic formulas used
in economics. These formulas are important tools for making economic analysis
and forecasting. It will be useful to learn and apply these formulas in order
to better understand the science of economics.