Answered

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Given the information below, answer the following two questions. Firm A Firm B Q 1000 1000 P 1 1 V 0.7 0.2 FC 200 700 A given change in Q will result in a larger change in EBIT for Firm ___ A. A B. B C. More information is needed to answer this question

Sagot :

anthougo

Answer:

Firm A and Firm B

C. More information is needed to answer this question

Explanation:

a) Data and Calculations:

          Firm A      Firm B

Q           1000        1000

P               1              1

V             0.7           0.2

Contr      0.3           0.8

FC         200         700

EBIT       100          100

b) More information is certainly required to answer this question.  Specifically, the direction of the given change in Q is not indicated.  The answer will become clearer with this information.  The question to ask is this: is the given change in Q an increase or a decrease?

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