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.

Question

Business

Prancer

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.

+1

Answers (1)

Know the Answer?

Jenna Benjamin · Answer 1

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.