A firm produces a good and generates $6 million in receipts. Wages are $1 million, rent is $500,000,and interest payments are $1 million. ThenA. profits are $3.5 million, the cost of production is $6 million, and households receive incomeequal to $6 million.O B. profits are $1.5 million, the cost of production is $6 million, and households receive incomeequal to $2.5 million.C. profits are $500,000, the cost of production is $2.5 million, and households receive incomeequal to $4.5 million.O D. profits are $500,000, the cost of production is $5 million, and households receive income equalto $4.5 million.

The cost of production of a firm will be the income for households, due to which, households' income…

Answered: A firm produces a good and generates $6…

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter18: Pricing The Factors Of Production

Section: Chapter Questions

Problem 4TY

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