After-tax profit of firm


Two firms, A and B, both produce gadgets. The price of gadgets are $2 each. Firm A has total fixed costs of $1,000,000 and variable costs of $1.00 per gadget. Firm B has total fixed costs of $300,000 and variable costs of $1.40 per gadget. The corporate tax rate is 30%. If the economy is strong, each firm will sell 2,000,000 gadgets. If the economy enters a recession, each firm will sell 1,000,000 gadgets. If the economy enters a recession, the after-tax profit of Firm B will be __________.

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Finance Basics: After-tax profit of firm
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