Acme is a perfectly competitive firm. It has the cost schedules given in the above table and has a fixed cost of $12.00. The price of Acme's product is $4.00
What is Acme's most profitable amount of output? What is Acme's total economic profit or loss?
Acme's most profitable (which means, in this case, minimum loss) is output of 0 units. The price is below Acme's minimum average variable cost, so Acme shuts down. Acme's economic loss equals its fixed costs, $12.00.
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Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
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