If a firm hires labor for $8,000, pays rent of $4,000, buys raw materials for $13,000 from another firm, earns profits of $1,200, and sells its output for $31,000, the value added by the firm is _____
a. $4,800
b. $10,000
c. $18,000
d. $25,000
e. $26,200
c
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Which of the following policy actions could speed productivity growth?
I. Tax incentives to encourage saving II. Encouraging international trade III. Directing public funds toward financing basic research A) II only B) I and III C) I only D) I, II, and III
Bubba's Burgers sells hamburgers in a perfectly competitive market at a price of $1.50 each. At the profit-maximizing (cost-minimizing) level of output, average total cost is $1.90 per hamburger and average variable cost is $1.75 per hamburger
Should the firm continue to operate in the short run? Explain.
The real balances effect predicts that higher prices:
a. make people worse off by reducing the value of their wealth, leading them to save more and spend less. b. make people worse off by reducing the value of their wealth, leading them to save less and spend more. c. make people better off by increasing the value of their wealth, leading them to save less and spend more. d. increase borrowing, leading to higher interest rates and less investment. e. make domestic goods relatively more expensive, increasing the demand for domestic goods and decreasing the demand for foreign goods.
The efficient price of a license fee is determined by the difference between
a. Marginal revenue and marginal cost b. Average revenue and marginal cost c. Total revenue and total cost d. Average revenue and total cost e. Total revenue and marginal cost