Am I doing right? purchases of intermediate goods from other firms QUESTION 2 Re

Question

Am I doing right?

purchases of intermediate goods from other firms QUESTION 2 Recall that land, labor, and capital are the fundamental resources, or factors of production that we use to create goods and services. Each of those factors of production earns income for its contribution to the production process. The inco taking and ingenuity) Suppose a firm hires labor for $12,000, pays rent of S4,000, pays $800 interest, buys raw materials for $13,000, and earns profits ge income is in the form of interest (for the use of physical capital), rent (for the use of land) and profit (for the entrepreneur's risk- 1.200. Categorize each of those amounts as either a payment to a factor of production or a purchase of an intermediate good from another firm. A The firm hires labor for $12,000 A Payment to a factor of production. B. Purchase of an intermediate good from another firm. A The firm pays rent ter its premises of $4,000. The firm pays $800 interest for the use of capital goods. B. The firm buys raw materials for $13,000 :The firm earns (pays its owners) profits of $1,200

Explanation / Answer

Payment to factors of production includes payment to labor, rent, paying of interest on capital goods.

Purchase of an intermediate good from another firm includes buying of raw materials.

1. A

2. A

3. A

4. B

5. A

All are correctly answered.

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