Answer to Question #231708 in Macroeconomics for Olivia Morton

Question

a. Suppose that businesses buy a total of $170 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. If households receive $88 billion in wages, $24 billion in rent, and $34 billion in interest, how much are households paid for providing entrepreneurial ability?

Answer 1

Total factor payments=$170 billion

Wages=$88 billion

Rent=$24 billion

Interest= $34 billion

Entrepreneural ability $=(170-88-24-34)=\$24\space billion$