A firm produces a good and generates $6 million in receipts. Wages are $1 million, rent is $500,000, and interest payments are $1 million. Then A. profits are $3.5 million, the cost of production is $6 million, and households receive income equal to $6 million. B. profits are $1.5 million, the cost of production is $6 million, and households receive income equal to $2.5 million. C. profits are $500,000, the cost of production is $2.5 million, and households receive income equal to $4.5 million. D. profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million.
A firm produces a good and generates $6 million in receipts. Wages are $1 million, rent is $500,000, and interest payments are $1 million. Then A. profits are $3.5 million, the cost of production is $6 million, and households receive income equal to $6 million. B. profits are $1.5 million, the cost of production is $6 million, and households receive income equal to $2.5 million. C. profits are $500,000, the cost of production is $2.5 million, and households receive income equal to $4.5 million. D. profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter18: Pricing The Factors Of Production
Section: Chapter Questions
Problem 4TY
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