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In an economy, households receive a total income of $4 million of this, $2.5 milion are wages received for labor services, $1
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Answer #1

Option (D).

Total production cost = Total income received by households = $4 million

Profit ($ million) = Total income received by households - Labor income - Rental payment - Interest payment

= 4 - 2.5 - 1 - 0.25

= 0.25 (= $25,000)

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