Two Firms, a and B, Both Produce Widgets

question 76

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 B will be

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

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Definitions:

Fine Leather Shoes

High-quality footwear made from the treated and crafted hide of animals, distinguished by their durability, comfort, and aesthetic appeal.

Large Paycheque

A significantly high remuneration or salary received by an employee, typically reflecting the value of their work or the success of their employer.

Long Years Of Education

Extended periods spent in formal educational institutions leading to higher levels of academic or professional qualification.

Satisfying Occupation

A job or career that provides fulfillment, meaning, and pleasure to the individual, often aligning with their interests, values, and capabilities, contributing to their overall happiness and well-being.