In Figure 10.3, perfectly competitive firms at 100 units of output: Figure 10.3 There are two graphs horizontally next to each other; the first graph is denoted as Market; on the first graph, supply and demand curve intersect at P1 and Q1; the second graph is denoted as Firm; there are three curves on the second graph; MC, AC and a horizontal line at price P1 from the first graph; AC dips below the horizontal line; MC intersects the horizontal line at quantity 100 In Figure 10.3, perfectly competitive firms at 100 units of output: are making an economic profit that is greater than zero. are setting average revenue to average cost. should cut output to maximize profit. incur an average cost that exceeds marginal cost