Households receive a total income of $5 million. Of this, $3.5 million are wages received for labor services, $1 million are rental payments, and $250,000 are interest payments received
What are the costs of production and profits equal to respectively?
A) $4.75 million; 0 B) $5 million; $250,000
C) $4.75 million; $250,000 D) $5 million; $500,000
B
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Other things being constant, if the marginal propensity to save (MPS) is 0.1, and private investment spending falls by $100 million, then real Gross Domestic Product (GDP)
A) increases by $1 billion. B) increases by $90 million. C) decreases by $1 billion. D) decreases by $10 million.
One way to view the cost structure of monopolistic competition is to say that the cost of product differentiation is equal to
A) the difference between marginal revenue and marginal cost. B) the difference between the cost of production for a monopolistically competitive firm in an open market and the minimum average total cost. C) the sum of price and marginal cost. D) the sum of marginal cost and minimum average cost.