LEVEL 7 IB Economics Paper 3 Formula sheet

Paper 3 formula sheet
Basic calculations must-know!
X2−X1
✓ Percentage change: Δ% = X1 × 100%
✓ Marginal X: X 2 − X 1
base × height
✓ Area of triangle: 2
✓ Area of rectangle: base × height
(top+bottom) × height
✓ Area of trapezium: 2
✓ Simultaneous equations

Microeconomics
Demand & Supply

Demand function Qd = a + bP "a": shift "b": slope

Supply function Qs = c + dP "c": shift "d": slope

Equilibrium price Qd = Qs Solve for P

Equilibrium quantity Substitute equilibrium price into Qd or Qs function -


Elasticities
new price − old price
% change in price %ΔP = old price × 100%
new Qd − old Qd
% change in quantity %ΔQd = old Qd × 100%

Price Elasticity of Demand (PED) %ΔQd PED>1 price elastic
P ED = %ΔP PED<1 price inelastic

Cross Elasticity of Demand (XED) %ΔQd of good X XED>0 substitutes
X ED = %Δprice of good Y XED<0 complements

Income Elasticity of Demand (YED) %ΔQd YED>0 normal good
Y ED = %ΔY YED<0 inferior good

Price Elasticity of Supply (PES) %ΔQs PES>1 price elastic
P ES = %ΔP PES<1 price inelastic


Specific Taxes & Subsidies

Specific tax Qs = c + d (P − tax)

Subsidy Qs = c + d (P + subsidy)
1
Welfare loss area of DW L triangle = 2 ×P ×Q

Revenue/Expenditure P ×Q

Surplus Qs − Qd

Shortage Qd − Qs




Compiled by @oatsnwaffles