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 $3.5 million.
D) profits are $500,000, the cost of production is $5 million, and households receive income equal to $5 million.
D
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To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
If private investment had held up as well as consumption did, the economic contraction from 1929 to 1933 would have been less severe than it was
Indicate whether the statement is true or false
Which of the following describes a situation in which demand must be elastic?
a. Total revenue increases by 15 percent when the price of corndogs rises by 15 percent. b. Total revenue increases by less than 15 percent when the price of corndogs rises by 15 percent. c. Total revenue decreases by more than 15 percent when the price of corndogs rises by 15 percent. d. Total revenue increases by $15 when the price of corndogs rises by $15. e. Total revenue increases by more than $15 when the price of corndogs rises by $15.
There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell.
Collectively, the residents of Towneburg would be willing to pay ________ for the 25th shell, and the marginal cost of the 25th shell is ________.
A. $20; $10 B. $0; $10 C. $0; $3,500 D. $10; $2,500