Compare to the pre-tax probability of loss

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Reference no: EM131880161

Given FC=$1,000,000 , P=$120 , AVC = $70 , E[Q], and S[Q], calculate the probability that the firm makes a loss. Graph and appropriately label the break-even analysis and the associated risk analysis (i.e., the triple-decker graph). Recall, unit sales are normally distributed and z = (Qbe - E[Q])/S[Q]. Suppose the government imposes a $5 per unit tax. Recalculate the probability of making a loss and compare to the pre-tax probability of loss.

Reference no: EM131880161

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