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17 December, 01:56

Suppose the firm faces a price of $49 , an average variable cost of $26 , and has an average fixed cost of $5. In the short-run, this firm

A. can cover all its costs,

B. cannot cover all its costs,

A. and will have a loss per unit of $18.

B. and will have a profit per unit of $23.

C. and will have a profit per unit of $18.

D. and will have a loss per unit of $23.

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Answers (1)
  1. 17 December, 05:45
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    A) can cover all its costs, ⇒ C) and will have a profit per unit of $18.

    Explanation:

    The company sells its products at $49 per unit, and each unit's total cost is $31 ( = $26 variable costs + $5 fixed costs), therefore the company is covering all its costs and making an $18 profit ( = $49 - $31) for each unit is sells.
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