Two Firms, C and D, Both Produce Coat Hangers

question 26

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 tax of firm C will be

• A) $420,000.
• B) $750,000.
• C) $510,000.
• D) $204,000.

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Definitions:

Rational Persuasion

The use of logical arguments and factual evidence to convince others to change their attitudes or behaviors.

Empirical Data

Information obtained through observation or experimentation, serving as a foundation for research and analysis.

Rational Argument

A logical discussion composed of premises leading to a conclusion, based on facts and reasoning rather than emotions or fallacies.

Selectively Providing

The strategy of offering resources or information to specific groups or individuals based on certain criteria or needs.