Question

A. Suppose that businesses buy a total of $160 billion of the four resources (labor, land, capital, and entrepreneurial ability) from households. If households receive $84 billion in wages, $22 billion in rent, and $32 billion in interest, how much are households paid for providing entrepreneurial ability?

Answer 1

Answer: $22 billion

If households receive $84 billion in wages (labor), $22 billion in rent (land), and $32 billion in interest (capital), households are paid ($160-$84-$22-$32) or $22 billion for providing entrepreneurial ability?

Entrepreneurial ability is a mix of many types of abilities measured by education, work experience, and the length of work.