A perfectly competitive firm faces a market clearing price of $150 per unit. Average total costs are at the minimum value of $200 per unit at an output rate of 100 units. Average variable costs are at the minimum value of $100 per unit at an output rate of 50 units. Marginal cost equals $150 per unit at an output rate of 75 units. It can be concluded that the short-run profit-maximizing output rate is

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In a perfectly competitive market, firms maximize profit by producing where marginal cost equals market price. Here, that occurs at 75 units. Since the average total cost ($200) is above the market price ($150), the firm incurs losses (negative economic profits) per unit sold.

A Perfectly Competitive Firm Faces a Market Clearing Price of $150