Question

The MagicSoft software company has a proposal to the city council of Alva, Florida, to relocate there. The proposal

claims that the company will generate $3.3 million for the local economy by the $1 million in salaries that will be paid.
The city council estimates that 70% of the salaries will be spent in the local community and 70% of that money will again
be spent in the community, and so on.
What is the correct estimate of the amount generated to the local economy?
a. $3.3 million
c. $2.7 million
b. $2.3 million
d. $1.9 million

Answer 1

• b. $2.3 million

Explanation:

Correct estimate is total generated amount minus salaries:

• $3.3 million - $1 million = $2.3 million

Correct answer choice is B.