Two Firms, a and B, Both Produce Widgets

question 31

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 is strong, the after-tax profit of Firm A will be

• A)$0.
• B)$6,000.
• C)$36,000.
• D)$60,000.

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Definitions:

Gatekeeping

The control over the flow of information, often practiced by media professionals or organizations deciding what information is published or broadcasted.

Leading Questions

Questions formulated in such a way that suggests the desired answer, often used to influence the respondent's response.

Reality Check

An assessment to bring someone back to the understanding of the actual situation rather than an imagined one, often used to dispel illusions or misconceptions.

Gate-Keeping Role

The function of controlling, limiting, or facilitating the flow of information in an organization or social system.