Normal Profit.
Firm is producing an output Q2, where MC = MR at price (P2) Its total cost (AC * Q ) equals its total revenue (P*Q) In this case the firm breaks even (or makes normal profit).
A competitive firm incurring losses.
At price P2 = $30 per unit the firm cannot avoid incurring losses, because that price is below the minimum average cost represented by P3 = $40. At the profit maximizing output q* the price P2 is less than an average cost, so that line segment AB measures the average loss form production where P= MC, which represent, AC - P (profit/loss per unit). The firm could minimize it's losses by producing at q*, with losses ABCD being incurred, however if the firm were to shut down, it would incur even greater losses equal to the fixed costs of production CBFE
ь Note that at any price lower than P2 the business cannot survive and will have to close down because MR will not be sufficient to cover the MC.
ь Note that at any price lower than P2 the business cannot survive and will have to close down because MR will not be sufficient to cover the MC.
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