CFA Chartered Financial Analyst Level 1 – Economics Correct Answers.

Price Elasticity of Demand Formula Correct Answer (% Change in Quantity Demanded) / (%t Change in Price) Cross Elasticity of Demand Formula Correct Answer (% Change in Quantity Demanded) / (% Change in Price of Substitute or Complement) Income Elasticity of Demand Formula Correct Answer (% Change in Quantity Demanded) / (% Change in Income) Price Elasticity of Supply Formula Correct Answer (% Change in Quantity Supplied) / (% Change in Price) Elasticity of Demand Factors Correct Answer 1) Availability of Substitute; 2) Relative amount of income spent on the good; 3) Time SINCE price change Elasticity of Supply Factors Correct Answer 1) Available substitutes for resources (inputs) used to produce the goods; (2) the time that has elapsed since the price change Income elasticity of an Inferior Good- Positive or Negative Correct Answer Negative Total Cost Formula Correct Answer = Total Fixed Cost + Total Variable Cost Average Fixed Cost Formula Correct Answer Average Fixed Cost = TFC/Q Average Variable Cost Formula Correct Answer Average Variable Cost= TVC/Q Average Total Cost Formula Correct Answer = AFC + AVC Unemployment Rate Formula Correct Answer (Number of Unemployed) / (Labor Force) x 100 Labor Force Participation Rate Formula Correct Answer (Labor Force) / (Working-Age Population(16 or older) ) x 100 Employment to Population Ratio Formula Correct Answer (Number of Employed) / (Working-Age Population) x 100 CPI Formula Correct Answer (Cost of Basket of Current Prices) / (Cost of Basket at Base Period Prices) x 100