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Question
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.
Answer
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