Final answer:
To determine the company's profits or losses, we need to consider the total revenue and total costs. The average cost can be used to determine whether the company is making or losing money at a given price. Unfortunately, we cannot determine whether the marginal unit is adding to profits without information on its production cost.
Step-by-step explanation:
a. To calculate the company's profits or losses, we need to consider the total revenue and total costs. Total revenue can be calculated by multiplying the quantity sold by the selling price. In this case, the quantity sold is 5 units and the selling price is $25 each. So, the total revenue would be $125 (5 units * $25).
To determine the company's profits or losses, we also need to consider the total costs. Unfortunately, the question doesn't provide information about the total costs. Therefore, we are unable to calculate the company's profits or losses.
b. Average cost represents the cost per unit. To determine whether the company is making or losing money at this price, we need to compare the average cost to the selling price. If the average cost per unit is less than the selling price, the company is making a profit. If the average cost per unit is greater than the selling price, the company is experiencing a loss.
c. The question doesn't provide information about the marginal unit's production cost, so we cannot determine whether the marginal unit is adding to profits.