times the average cost of $2.73, which the area of the rectangle from the origin to a quantity of 50, up to point

C”, over to the vertical axis and down to the origin shows. It should be clear from examining the two rectangles

that total revenue is less than total cost. Thus, the firm is losing money and the loss (or negative profit) will be

the rose-shaded rectangle.

The calculations are:

Or:

Access for free at openstax.org
8.2 • How Perfectly Competitive Firms Make Output Decisions 197

If the market price that perfectly competitive firm receives leads it to produce at a quantity where the price is

greater than average cost, the firm will earn profits. If the price the firm receives causes it to produce at a

quantity where price equals average cost, which occurs at the minimum point of the AC curve, then the firm

earns zero profits. Finally, if the price the firm receives leads it to produce at a quantity where the price is less
{"source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:24:38.309401", "total_pages": 597, "creator": "PDFMiner", "moddate": "2022-12-07T14:23:05-06:00", "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "file_type": ".pdf", "file_name": "Microeconomics3e.pdf", "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "title": "Principles of Microeconomics 3e", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "file_size_mb": 26.99, "uploaded_via": "batch_uploader"}