Assume a purely competitive firm is selling 200 units of output at $3 each. At this output, its total fixed cost is $100 and its total variable cost is $350. This firm

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To determine if the firm is maximizing its profit, we need to calculate its total revenue and total cost. Total revenue is found by multiplying the price ($3) by the quantity sold (200 units), which gives $600. Total cost is the sum of total variable cost and total fixed cost, which gives $450 ($100 + $350).

Total profit is found by subtracting total cost from total revenue, which gives $150. Since this is a positive number, the firm is making a profit. However, it may not be maximizing its profit since there may be another output level that yields a higher profit. Therefore, the correct answer is B.

If the firm were incurring losses (total cost greater than total revenue), it would need to shut down in the short run. However, this is not the case here.

Assume a Purely Competitive Firm Is Selling 200 Units of Output