Two Firms, C and D, Both Produce Coat Hangers

question 5

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 is strong, the total cost of firm C will be

• A) $1,680,000.
• B) $1,170,000.
• C) $1,350,000.
• D) $420,000.

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Definitions:

Peer Review

Rephrased: The assessment of an individual's work or performance by others who are of the same rank in a workplace or professional organization.

Panel Composed

A group of selected individuals brought together to discuss, investigate, or decide on a particular matter.

Organization

An entity comprising multiple people, such as a business or government agency, organized to achieve specific goals.

Arbitration

A form of alternative dispute resolution where an impartial third party, the arbitrator, makes a decision to resolve a dispute outside of court.