IGCSE Economics (0455) formula sheet

Every calculation in the Glide Economics notes, grouped by topic. Show the formula and substitute the actual numbers: a correct final answer with no working can still lose marks when the question asks for working.

The basic economic problem

Quantity	Formula
Opportunity cost	opportunity cost of 1 more unit of X = units of Y given up (measured in the good forgone, not in money)

Elasticity

Quantity	Formula
Price elasticity of demand (PED)	PED = %Δ quantity demanded ÷ %Δ price
Price elasticity of supply (PES)	PES = %Δ quantity supplied ÷ %Δ price
Percentage change	(new value − original value) ÷ original value × 100

PED and PES have no units. Report PED as a positive value.

Description	Value	Quantity changes…
Perfectly inelastic	0	not at all, whatever happens to price
Inelastic	between 0 and 1	by proportionately less than price
Unitary elastic	1	by exactly the same percentage as price
Elastic	greater than 1	by proportionately more than price
Perfectly elastic	infinity	to zero for any price rise above the given price

If demand is inelastic, raising price raises total revenue. If demand is elastic, the same rise cuts total revenue.

Costs and revenue

Quantity	Formula
Total cost	TC = FC + VC
Average fixed cost	AFC = FC ÷ Q
Average variable cost	AVC = VC ÷ Q
Average total cost	ATC = TC ÷ Q
Total revenue	TR = P × Q
Average revenue	AR = TR ÷ Q (= P when every unit sells at the same price)
Profit	profit = TR − TC

Costs and revenue are in $, and the averages are in $ per unit.

Government and the macroeconomy

Quantity	Formula
Budget balance	budget balance = government revenue − government spending (deficit if negative, surplus if positive)
Total demand	total demand = C + I + G + (X − M)
Economic growth rate	(change in real GDP ÷ original real GDP) × 100
Unemployment rate	(number unemployed ÷ labour force) × 100
Inflation rate (from the CPI)	(change in the index ÷ original index) × 100
Average rate of tax	(tax paid ÷ income) × 100

In total demand, C is consumption, I is investment, G is government spending, X is exports and M is imports. The labour force is everyone in work plus everyone unemployed and seeking work.

Economic development

Quantity	Formula
Real GDP per head	real GDP per head = real GDP ÷ population
Net migration	net migration = immigration − emigration (positive if net inward, negative if net outward)

A population grows when the birth rate exceeds the death rate, when net migration is positive, or both. The HDI is not a formula you calculate: it combines three equally weighted components, health, education and income.

International trade

Quantity	Formula
Current account balance	net goods + net services + net primary income + net secondary income (credits − debits)

Exam tips for calculations

Write the formula first, then substitute the numbers, then give the answer with its unit (%, $ or $ per unit).
For percentage changes, divide by the original value, not the new one.
Check the sign: a negative net migration or a negative budget balance has a meaning, so say what it means.

Practise on real questions with Economics past papers and their mark schemes, or revise each topic in the Economics notes. For how to word written answers, see the command words guide.