Two Firms, a and B, Both Produce Widgets

question 83

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 A will be

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

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Definitions:

Sensitive Periods

Specific times in an individual's development when they are more responsive to certain stimuli and quicker to learn particular skills.

Theoretical Framework

A structure of concepts, theories, and propositions that provides an organized way to interpret and understand phenomena.

Piaget's Stage Theory

Piaget's Stage Theory proposes that children progress through four stages of cognitive development, each characterized by different capabilities and ways of processing information: sensorimotor, preoperational, concrete operational, and formal operational stages.

Sociocultural Approach

A theoretical perspective that examines the ways in which social and cultural environments influence human behavior and cognitive processes.