recelive a total income of 5 millon Of this 35 miltion are w

recelive a total income of $5 millon, Of this, $3.5 miltion are wages recelved for labor s services, $1 million are rental payments, and $250,000 are interest payments necelved What are the costs of production and profits equal to respectively? O A. $5 million; $250,000 O B. $4.75 million: $250,000 O C. $4.75 million 0 O D. $5 milion: $500,000 Click to select your answer 8 3 5

Solution

Answer = B

Profit= total income- ( wages+RENT+ interest payments)

So profit= $5 million- $4.75 million

So Profit= $250000.

Costs of pRoduction = total household income - profits

So , costs of pRoductIon= $5 million - 250000

  

Costs of production= $4.75 million.