John Company Has the Following Information Assume the Tax Rate Decreases to 30

question 58

Multiple Choice

John Company has the following information:
$\begin{array}{ll}\text { Income taxrate } & 40 \% \\\text { Selling price per unit } & \$ 7.50 \\\text { Variable cost per unit } & \$ 2.50 \\\text { Total fixed costs } & \$ 100,000 \\\text { Target after-tax net income } & \$ 42,000\end{array}$
Assume the tax rate decreases to 30%.How many fewer units can be sold to retain the same after-tax net income of $42,000?

• A) 1,000
• B) 2,000
• C) 32,000
• D) 34,000

---

Definitions:

Benefit Surpluses

Surplus benefits are the additional welfare or gains received by individuals or society that exceed the expected or required amounts; however, in a strict economic context, the term is uncommon and might be a misinterpretation of concepts like consumer or producer surplus.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded by consumers at those prices.

Supply Curve

A visual chart that illustrates the connection between a product's price and the amount of the product that suppliers are prepared to offer.

External Benefits

Positive effects experienced by third parties or the society at large due to an economic transaction they were not directly involved in.