79.
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¢ per coat hanger. Firm D
has total fixed costs of $400,000 and variable costs of 50¢ 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 after-tax profit of firm C will be
80.
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¢ per coat hanger. Firm D
has total fixed costs of $400,000 and variable costs of 50¢ 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 revenue of firm C will be
81.
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¢ per coat hanger. Firm D
has total fixed costs of $400,000 and variable costs of 50¢ 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
82.
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¢ per coat hanger. Firm D
has total fixed costs of $400,000 and variable costs of 50¢ 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 before tax profit of firm C will be
83.
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¢ per coat hanger. Firm D
has total fixed costs of $400,000 and variable costs of 50¢ 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 tax of firm C will be
84.
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¢ per coat hanger. Firm D
has total fixed costs of $400,000 and variable costs of 50¢ 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 after-tax profit of firm C will be
85.
If a firm’s sales decrease by 15% and profits decrease by 20% during a recession, the
firm’s operating leverage is
17-95
Short Answer Questions
86.
Discuss the tools of the U.S. government’s “demand-side” policy. Include in your
discussion of these tools the relative advantages and disadvantages of each in terms of
the effect of the use of these tools on the economy.
87.
Discuss the National Bureau of Economic Research (NBER)’s indexes of economic
indicators and how each of the categories of these indicators might be used by the
securities’ analyst.
88.
Discuss the industry life cycle, how this concept can be used by security analysts, and the
limitations of this concept for security analysis.
89.
Discuss the ways in which the global economy might have an effect on a firm whose
headquarters are in Montana. Be specific—cite some of the relevant factors that should
be considered.
90.
List and discuss three of the five determinants of competition suggested in Porter’s 1985
study.
