Households receive a total income of $5 million. Of this, $3.5 million are wages received for labor services, $1 million are rental payments, and $250,000 are interest payments received
What are the costs of production and profits equal to respectively?
A) $4.75 million; 0 B) $5 million; $250,000
C) $4.75 million; $250,000 D) $5 million; $500,000
B
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Consider the following pricing strategies:
a. perfect price discrimination b. charging different prices to different groups of customers c. optimal two-part tariff d. single-price monopoly pricing Which of the pricing strategies allows a producer to capture the entire consumer surplus that would have gone to consumers under perfect competitive pricing? A) a, b, c, and d B) a, b, and c only C) a and b only D) a and c only
To allow the price mechanism to work, no one business firm should be large enough to have an _____________________.
Fill in the blank(s) with the appropriate word(s).
If the elasticity of labor is 0.60, a 15 percent increase in the wage rate will induce a
A. 9.0 percent increase in the quantity of labor supplied. B. 9.0 percent decrease in the quantity of labor supplied. C. 4.0 percent decrease in the quantity of labor supplied. D. 4.0 percent increase in the quantity of labor supplied.
Barry was a mortgage originator from 2002 to 2007. He often had clients who had limited financial assets, but he nevertheless encouraged them to take out large mortgages he felt they probably could not afford. Briefly explain why Barry would have been motivated to make such financial transactions.
What will be an ideal response?