Two Firms, a and B, Both Produce Widgets

question 41

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 B will be

• A) $0.
• B) $6,000.
• C) $36,000.
• D) $60,000.
• E) None of the options are correct.

---

Definitions:

Epididymis

A long, coiled tube located behind the testis where sperm mature and are stored.

Seminal Vesicles

Glands in the male reproductive system that produce a significant portion of the fluid that becomes semen.

Vas Deferens

The duct that conveys sperm from the testicle to the urethra, playing a key role in the male reproductive system.

Human Chorionic Gonadotropin

A hormone produced during pregnancy by the developing embryo and the placenta to support fetal growth.