Final answer:
From the provided data, the company will experience losses of $5 when producing 5 units and selling them at a price of $25 each. Looking at the average cost, we can determine that the company is losing money at this price. The impact of the marginal unit on profits cannot be determined without additional information.
Step-by-step explanation:
From the data provided, we can calculate the company's profits or losses by comparing total revenue and total cost. In this scenario, the company produces 5 units and sells each unit for $25, resulting in total revenues of $125. However, the total costs for producing 5 units are $130. Therefore, the company experiences losses (or negative profits) of $5 at this level of quantity and output.
We can determine whether the company is making or losing money at this price by looking at the average cost. If the average cost per unit is greater than the price per unit, then the company is losing money. In this case, the average cost per unit is $26 ($130 total costs divided by 5 units), which is greater than the price per unit of $25. Therefore, the company is losing money at this price.
The marginal unit produced refers to the additional unit produced and sold. To determine if the marginal unit is adding to profits, we need to compare the marginal cost to the marginal revenue. If the marginal revenue is greater than the marginal cost, then the marginal unit is adding to profits. However, without information about the marginal cost and marginal revenue, we cannot definitively determine if the marginal unit is adding to profits in this scenario.