Two Firms, a and B, Both Produce Widgets

question 28

Multiple Choice

Two firms, A and B, both produce widgets.The price of widgets is $1 each.Firm A has total fixed costs of $500,000 and variable costs of 50' per widget.Firm B has total fixed costs of $240,000 and variable costs of 75' per widget.The corporate tax rate is 40%.If the economy is strong, each firm will sell 1,200,000 widgets.If the economy enters a recession, each firm will sell 1,100,000 widgets. If the economy enters a recession, the after-tax profit of Firm A will be

• A)$0.
• B)$6,000.
• C)$30,000.
• D)$60,000.

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Definitions:

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Anticybersquatting Consumer Protection Act (ACPA)

A United States federal law enacted in 1999 intended to give trademark owners legal remedies against defendants who register domain names "in bad faith" that are identical or misleadingly similar to a trademark or personal name.

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The individual or entity that legally holds the rights to a trademark, responsible for its usage and protection against infringement.