Firm a Produces Gadgets

question 81

Multiple Choice

Firm A produces gadgets. The price of gadgets is $2 each. Firm A has total fixed costs of $1,000,000 and variable costs of $1 per gadget. The corporate tax rate is 40%. If the economy is strong, the firm will sell 2,000,000 gadgets. If the economy enters a recession, the firm will sell only half as many gadgets. If the economy enters a recession, the after-tax profit of firm A will be ________.

• A) $0
• B) $90,000
• C) $180,000
• D) $270,000

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Definitions:

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Forming conclusions based strictly on a predefined set of doctrines or political beliefs.

Constrains

Limits or restricts someone's actions or behavior.

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A summary or synthesis of complex ideas, thoughts, or findings that may not have a direct, tangible representation.