Cambridge IGCSE 0455 / 0987
Quick-reference guide for Cambridge IGCSE Economics students covering micro and macro formulas with real exam context.
Use this curated formula sheet to keep demand, supply, elasticity, national income and cost relationships at your fingertips. Each formula is annotated with exam-ready reminders so you can focus on application during structured and data-response questions.
Elasticities explained with sign conventions
Cost and revenue structures for firms
Macroeconomic performance indicators
Application tips for Paper 2 data response
Remember to attach the sign (+/−) to elasticity calculations in your final answer.
Measures responsiveness of quantity demanded to a change in price.
PED = (% Δ in quantity demanded) / (% Δ in price) Expect negative values for majority of goods; report absolute value if asked for magnitude only.
Measures responsiveness of quantity supplied to a change in price.
PES = (% Δ in quantity supplied) / (% Δ in price) Classify goods: positive (>0) for normal goods, negative (<0) for inferior goods.
YED = (% Δ in quantity demanded) / (% Δ in income) Identify substitutes (positive) vs complements (negative).
XED = (% Δ in quantity demanded of good X) / (% Δ in price of good Y) Use when price/quantity changes are large to avoid asymmetry.
% Δ = ((New − Original) / ((New + Original) / 2)) × 100% Always state the time period (short run / long run) when discussing these relationships.
TR total revenue, AR revenue per unit, MR change in revenue from selling one more unit.
Total Revenue (TR)
TR = Price × Quantity Average Revenue (AR)
AR = TR / Quantity Marginal Revenue (MR)
MR = ΔTR / ΔQuantity TFC fixed costs, TVC variable costs, TC total cost, ATC average total cost, AFC average fixed cost, AVC average variable cost, MC marginal cost (extra cost per unit).
Total Cost (TC)
TC = Total Fixed Cost (TFC) + Total Variable Cost (TVC) Average Total Cost (ATC)
ATC = TC / Quantity Average Fixed Cost (AFC)
AFC = TFC / Quantity Average Variable Cost (AVC)
AVC = TVC / Quantity Marginal Cost (MC)
MC = ΔTC / ΔQuantity Total Profit
Profit = TR − TC Average Profit
Average Profit = AR − ATC Profit Maximisation Rule
MR = MC Assuming MC is rising after the intersection.
Contribution compares selling price to variable cost; break-even output is units needed to cover total fixed costs.
Contribution per Unit
Contribution = Price − AVC Break-even Output
Break-even quantity = TFC / Contribution per unit C = Consumption, I = Investment, G = Government expenditure, X = Exports, M = Imports.
AD = C + I + G + (X − M) MPC = Marginal Propensity to Consume, MPS = Marginal Propensity to Save.
Simple Multiplier
k = 1 / (1 − MPC) = 1 / MPS Income Change
ΔY = k × Initial Injection Use weighted basket costs; express price changes as percentages relative to base year.
Price Index
Price Index = (Current basket cost / Base year basket cost) × 100 Inflation Rate
Inflation (%) = ((Current index − Previous index) / Previous index) × 100 Current Account Balance
Current Account = (X − M) + Net primary income + Net secondary income Labour force includes everyone employed or actively seeking work.
Unemployment (%) = (Number of unemployed / Labour force) × 100 Positive value shows expansion; use real (inflation-adjusted) GDP figures.
GDP Growth (%) = ((Real GDP this year − Real GDP last year) / Real GDP last year) × 100 Use an index where base year = 100.
Real GDP = (Nominal GDP / Price Index) × 100 Compare using real GDP to account for inflation; population measured mid-year.
GDP per capita = Total GDP / Population Index above 100 indicates export prices relatively higher; track changes to discuss improvements or deteriorations.
Terms of Trade = (Average export price index / Average import price index) × 100 HDI combines life expectancy, education index, and GNI per capita index.
No calculation required for IGCSE, but know the three components.
Boost your Cambridge exam confidence with these proven study strategies from our tutoring experts.
When using formulas in Paper 2, write the formula first, show substitution with data from the extract, then present the final value with correct units.
Pair each formula with the theory it belongs to (e.g., PED with revenue implications) to strengthen your evaluation marks.
Spend 5 minutes daily re-working past-paper numeric questions so formula recall becomes automatic under exam timing.
Group formulas by microeconomic or macroeconomic topic in your notes to make structured questions easier to plan.
Work through Cambridge-style case studies and data response questions with an experienced IGCSE Economics tutor. We focus on mastering both calculation accuracy and evaluation depth.
This formula sheet aligns with Cambridge Assessment International Education IGCSE Economics (0455/0987) syllabus content.
Always cross-check numeric responses with the units provided in the question and support calculations with contextual analysis for full marks.