If the Consumption Function Is Defined as C = 5,500

question 193

Multiple Choice

If the consumption function is defined as C = 5,500 + 0.9Y,what is the value of the multiplier?

• A)0.1
• B)0.9
• C)9
• D)10

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Definitions:

Economic Profit

The difference between the total revenue generated by a business and the total costs, including both explicit and implicit costs.

Accounting Profit

The total revenue of a firm minus the explicit costs directly associated with its operation, such as materials and labor, calculated according to standard accounting practices.

Implicit Cost

The opportunity cost equal to what a firm must give up in order to use resources it already owns for production, without direct payment.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.