Suppose that in a perfectly competitive market, the market price is $10. A firm in that market has marginal cost of $10, average total cost of $12, and it is producing 100 units. The firm is

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The firm is incurring total economic losses because its average total cost ($12) is higher than the market price ($10), leading to a loss of $2 per unit. With 100 units produced, the total loss is $200 ($2 loss/unit * 100 units). The firm is minimizing economic losses by producing where marginal cost equals market price, which is the condition for profit maximization or loss minimization in perfect competition.

Suppose That in a Perfectly Competitive Market, the Market Price