According to the Wall Street Journal (Nov. 1, 1995), net income for World Airways in the third quarter of 1995 was $3.359 million or 33 cents per share. This is a significant rebound from its 1994 third quarter performance in which World Airways' net income was minus $7.491 million, reflecting a loss. Around this period, the per share price of World Airways stock was around $12.
A. Use short run average cost curves to explain why World Airways did not shut its operations down in the third quarter of 1994.
B. From the information provided, can you tell whether World Airways made an economic loss, economic profit, or a normal return on investment in the third quarter of 1995?