Price Elasticity of Demand (PED)
PED is normally negative (inverse relationship). Elastic: |PED| > 1. Inelastic: |PED| < 1. Unitary: |PED| = 1.
PED = % change in quantity demanded / % change in price Cambridge O Level 2281
📊 O Level Economics Formula Sheet 2026
All key formulas and relationships for Cambridge O Level Economics (2281) — elasticity, costs, revenue, national income and development indicators.
Elasticity Costs & Revenue National Income Development
Our formula sheets are free to download — save this one as PDF for offline revision.
Aligned with the latest 2026 syllabus and board specifications. This sheet is prepared to match your exam board’s official specifications for the 2026 exam series.
O Level Economics — All Key Formulas in One Place
Cambridge O Level Economics (2281) includes both qualitative and quantitative questions. This sheet covers all the key formulas and calculation techniques you need for Papers 1 and 2, with examiner notes on how to present answers correctly.
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Elasticity formulas with sign conventions
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Costs, revenue and profit structures
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National income and macroeconomic indicators
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Development and trade calculations
Demand, Supply and Elasticity
Price Elasticity of Supply (PES)
Always positive. Elastic PES > 1; Inelastic PES < 1.
PES = % change in quantity supplied / % change in price Income Elasticity of Demand (YED)
Positive = normal good. Negative = inferior good. YED > 1 = luxury good.
YED = % change in quantity demanded / % change in income Cross Elasticity of Demand (XED)
Positive = substitutes. Negative = complements.
XED = % change in quantity demanded of good X / % change in price of good Y Percentage Change Formula
Use this to calculate the % changes needed for elasticity formulas.
% change = ((new value − original value) / original value) × 100% Costs, Revenue and Profit
Total, Average and Marginal Revenue
Total Revenue (TR) = Price × Quantity
Average Revenue (AR) = TR / Quantity
Marginal Revenue (MR) = ΔTR / ΔQuantity
Cost Structures
Total Cost (TC) = Total Fixed Cost + Total Variable Cost
Average Total Cost (ATC) = TC / Quantity
Average Fixed Cost (AFC) = TFC / Quantity
Average Variable Cost (AVC) = TVC / Quantity
Marginal Cost (MC) = ΔTC / ΔQuantity
Profit
Profit = TR − TC
Average Profit = AR − ATC
Profit maximisation: MR = MC
Break-even
Contribution per unit = Price − AVC
Break-even output = TFC / Contribution per unit
National Income and Macroeconomics
Aggregate Demand
C = Consumption, I = Investment, G = Government spending, X = Exports, M = Imports.
AD = C + I + G + (X − M) Multiplier
MPC = Marginal Propensity to Consume. MPS = Marginal Propensity to Save. MPC + MPS = 1.
Multiplier (k) = 1 / (1 − MPC) = 1 / MPS
Change in income (ΔY) = k × Initial injection
Inflation Rate
Inflation (%) = ((CPI this year − CPI last year) / CPI last year) × 100% Unemployment Rate
Unemployment rate (%) = (number unemployed / labour force) × 100% GDP Growth Rate
GDP growth (%) = ((real GDP this year − real GDP last year) / real GDP last year) × 100% GDP per Capita
GDP per capita = Total GDP / Population Real vs Nominal GDP
Real GDP = (Nominal GDP / Price Index) × 100 International Trade and Development
Current Account Balance
Positive = surplus. Negative = deficit.
Current Account = (X − M) + Net income + Net transfers Terms of Trade
Rising terms of trade = improvement (exports relatively more expensive).
Terms of Trade = (Index of export prices / Index of import prices) × 100 Human Development Index (HDI)
Composite measure of: life expectancy at birth, years of schooling, and GNI per capita (PPP). Ranges 0–1. No single formula — Cambridge expects knowledge of the three components.
Gini Coefficient
Measures income inequality. 0 = perfect equality. 1 = maximum inequality. Shown by Lorenz curve.
How to Use This Formula Sheet
Boost your Cambridge exam confidence with these proven study strategies from our tutoring experts.
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Show formula then substitute
In data response questions: always write the formula first, then substitute the numbers, then calculate. Marks are awarded for correct method.
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Elasticity: attach the sign
PED is negative — report as negative unless asked for magnitude only. PES is always positive. XED sign tells you if goods are substitutes or complements.
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Link formulas to diagrams
Pair every formula with the relevant diagram: AD/AS for macroeconomics, demand/supply for elasticity, cost curves for firms.
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Evaluation: 'it depends'
For 8-12 mark questions, always evaluate. The effect of a policy 'depends on' the elasticity, time period, other factors. This is where top marks are earned.
Formula Sheet FAQ
Quick answers about this free PDF and how to use it for exam revision and active recall.
Is the Cambridge O Level Economics Formula Sheet 2026 free to download as a PDF?
Yes. This Tutopiya formula sheet is free to use and you can download it as a PDF from this page for offline revision. There is no payment or account required for the PDF download.
What Economics topics and equations does this formula sheet cover?
This page groups key Economics formulas in one place for revision. Complete formula reference for Cambridge O Level Economics (2281). Key equations for elasticity, national income, costs, revenue and development indicators with O Level exam tips. Always cross-check with your official syllabus and past papers for your exam session.
Can I use this instead of the official exam formula booklet in the exam?
No. In the exam you must follow only what your exam board allows in the hall—usually the official formula booklet or data sheet where provided. This page is a revision and teaching aid, not a replacement for board-issued materials.
Who is this formula sheet for (Secondary)?
It is written for students preparing for assessments at Secondary in Economics, including classroom revision, homework support, and independent study. Teachers and tutors can also share it as a quick reference.
How should I revise with this formula sheet?
Work through past paper questions, quote the correct formula before substituting values, and check units and notation every time. Pair this sheet with timed practice and mark schemes so you see how examiners expect working to be set out.
Where can I get more help with Economics revision?
Explore Tutopiya’s study tools, past paper finder, and revision checklists linked from our tools hub, or book a trial lesson with a subject specialist for personalised support alongside this formula reference.
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This formula sheet aligns with Cambridge O Level Economics (2281) syllabus content.
O Level Economics (2281) and Cambridge IGCSE Economics (0455) cover similar content — past papers from both can be used for practice.