1. 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 cents per widget. Firm B has total fixed costs of $240,000 and variable costs of 75 cents 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 enters a recession, the after-tax profit of Firm A will be _______. (Points : 4)
$0
$6,000
$30,000
$60,000
None of these is correct.
2. Fiscal policy is difficult to implement quickly because (Points : 4)
it requires political negotiations.
much of government spending is nondiscretionary and cannot be changed.
increases in tax rates affect consumer spending gradually.
it requires political negotiations and much of government spending is nondiscretionary and cannot be changed.
it requires political negotiations and increases in tax rates affect consumer spending gradually.
3. 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 cents per widget. Firm B has total fixed costs of $240,000 and variable costs of 75 cents 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 enters a recession, the after-tax profit of Firm B will be ______. (Points : 4)
$0
$6,000
$36,000
$60,000
None of these is correct.
4. Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30 cents per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50 cents per coat hanger. The corporate tax rate is 40%. 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 total cost of Firm C will be _______. (Points : 4)
$1,680,000
$1,170,000
$1,350,000
$420,000
None of these is correct.
5. Inflation (Points : 4)
is the rate at which the general level of prices is increasing.
rates are high when the economy is considered to be "overheated."
is unrelated to unemployment rates.
is the rate at which the general level of prices is increasing; and rates are high when the economy is considered to be "overheated."
is the rate at which the general level of prices is increasing; and is unrelated to unemployment rates.
6. Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30 cents per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50 cents per coat hanger. The corporate tax rate is 40%. 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 revenue of Firm C will be _______. (Points : 4)
$1,680,000
$1,400,000
$2,000,000
$0
None of these is correct.
7. 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 cents per widget. Firm B has total fixed costs of $240,000 and variable costs of 75 cents 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 B will be _________. (Points : 4)
$0
$6,000
$36,000
$60,000
None of these is correct.
8. Two firms, C and D, both produce coat hangers. The price of coat hangers is $1.20 each. Firm C has total fixed costs of $750,000 and variable costs of 30 cents per coat hanger. Firm D has total fixed costs of $400,000 and variable costs of 50 cents per coat hanger. The corporate tax rate is 40%. 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 C will be _______. (Points : 4)
$1,680,000
$1,170,000
$750,000
$420,000
None of these is correct.