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A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65. In the long run, the firm should a. ​Continue operating price is higher than average cost, its making a profit b. ​Shut down since price is greater than average cost c. ​Shut-down because it is cost effective to pay off the remaining fixed costs d. ​Continue operating as the firm is covering all the variable costs and some of the fixed costs

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Answer:

a. ​Continue operating price is higher than average cost, its making a profit

Explanation:

In the long run, a company should only continue to operate if its price per unit is greater than total costs per unit.

In this case, total costs per unit are $65, while the selling price per unit is $70.

Since $70 > $65, then the company should continue operating since it is making a profit.

The answer is a. ​Continue operating price is higher than average cost, its making a profit.

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