Assume a perfectly competitive firm is producing 300 units of output,P = $10,ATC of the 300ᵗʰ unit is $11,marginal cost of the 300ᵗʰ unit = $10,and AVC of the 300ᵗʰ unit = $9.Based on this information,the firm is:

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In the short run, a perfectly competitive firm should continue to operate as long as it can cover its variable costs, which in this case is $9 (AVC of the 300th unit). Therefore, the firm should produce and sell 300 units at a price of $10 per unit, generating a total revenue of 300 x $10 = $3000. The total cost of production would be 299 units at AVC of $9 ($2691) and 1 unit at ATC of $11 ($11), making the total cost $2702. The firm's total revenue ($3000) is greater than its total cost ($2702), meaning it is incurring a loss of $298 ($3000 - $2702 = $298). Therefore, the firm should continue to operate in the short run, but it is not earning an economic profit.

Assume a Perfectly Competitive Firm Is Producing 300 Units of Output,P