question archive Two firms, X and Y, both produce widgets
Two firms, X and Y, both produce widgets
Subject:FinancePrice: Bought3
Two firms, X and Y, both produce widgets. The price of widgets is $1 each. Firm X has total fixed costs of $500,000 and variable costs of $0.5 per widget. Firm Y has total fixed costs of $240,000 and variable costs of $0.75 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. 2. If the economy enters a recession, the after-tax profit of Firm Y will be $21,000 O $35,000 O $30,000 O $50,000
