A Firm Produces a Good and Generates $5 Million in Receipts

question 225

Multiple Choice

A firm produces a good and generates $5 million in receipts. Wages are $3 million, rent is $500,000, and interest payments are $1 million. Then

• A) profits are $500,000, the cost of production is $4.5 million, and households receive income equal to $4.5 million.
• B) profits are $500,000, the cost of production is $5 million, and households receive income equal to $4.5 million.
• C) profits are $500,000, the cost of production is $5 million, and households receive income equal to $5 million.
• D) profits are $500,000, the cost of production is $5 million, and households receive income equal to $3.5 million.

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