Question
1. Two firms, Kappa and Delta, both produce coat hangers. The price of the coat hangers is $1.50 each. Firm Kappa has total fixed costs
1. Two firms, Kappa and Delta, both produce coat hangers. The price of the coat hangers is $1.50 each. Firm Kappa has total fixed costs of $750,000 and variable costs of 50 per coat hanger. Firm Delta has total fixed costs of $400,000 and variable costs of 50 per coat hanger. The corporate tax rate is 21%. 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 enters a recession, the total cost of firm Kappa will be
2. Two firms, Kappa and Delta, both produce coat hangers. The price of the coat hangers is $1.50 each. Firm Kappa has total fixed costs of $750,000 and variable costs of 50 per coat hanger. Firm Delta has total fixed costs of $400,000 and variable costs of 30 per coat hanger. The corporate tax rate is 21%. 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 before-tax profit of firm Kappa will be
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