Suppose the Consumption Function Is C = $500 + 0

question 57

Multiple Choice

Suppose the consumption function is C = $500 + 0.8Y. If Y = $1,000, what is the amount of consumption?

• A) $300
• B) $500
• C) $1,000
• D) $1,300

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Definitions:

Fixed Supply

A condition where the quantity of a good or resource available does not change, regardless of price.

Economic Rent

Payment to a factor of production in excess of what is needed to keep that factor in its current use.

Production Cost

The total expense of producing a good or service, including labor, materials, and overhead costs.

Land Rent

The payment made for the use of land, which is determined by its location, fertility, and other factors influencing its productive capacity.