Firm B Produces Gadgets

question 47

Multiple Choice

Firm B produces gadgets. The price of gadgets is $2 each. Firm B has total fixed costs of $300 000 and variable costs of $1.40 per gadget. The corporate tax rate is 30%. If the economy is strong, the firm will sell 2 000 000 gadgets. If the economy enters a recession it will sell only half as many gadgets. If the economy is strong, the after-tax profit of Firm B will be ________.

• A)$90 000
• B)$210 000
• C)$300 000
• D)$630 000

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Definitions:

Full-Fare Air Ticket

A type of airline ticket that is sold at the highest price, offering maximum flexibility and no restrictions.

Probability

A numeric value between 0 and 1 that represents the chances of an event taking place.

Aggressive Strategy

An investment or business strategy aimed at achieving high returns by taking on a higher level of risk.

Conservative Strategy

An investment or management approach that prioritizes safety and risk avoidance, often by choosing stable and less volatile assets.