Two Firms, C and D, Both Produce Coat Hangers

question 21

Multiple Choice

Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30¢ per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50¢ per coat hanger. The corporate tax rate is 40%. If the economy is strong, each firm will sell 2,000,000 coat hangers. If the economy enters a recession, each firm will sell 1,400,000 coat hangers. If the economy enters a recession, the after-tax profit of firm C will be

• A) $1,680,000.
• B) $750,000.
• C) $510,000.
• D) $204,000.
• E) $306,000.

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Definitions:

Specificity Coding

The theory that certain neurons or groups of neurons in the brain are dedicated to responding to very specific stimuli.

Visual Sensations

The experiences derived from stimuli reaching the eyes, leading to the perception of light, colors, shapes, movement, and depth.

Auditory Sensations

Perceptions of sound, including their pitch, volume, and timbre, as processed by the ear and the brain.

Transduction

The process of converting one form of energy into another, as in sensory systems converting physical stimuli (like light or sound) into neural signals.