Question

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.

Answer 1

A) can cover all its​ costs, ⇒ C) and will have a profit per unit of ​$18.

Step-by-step 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.