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When using refrigerated a/c, is the knob supposed to be set to let outside air in or not?

I am trying to maximize my air conditioner's cooling ability.

To maximize your A/Cs cooling ability you should NOT use the "fresh air" door which draws some outside air inside.

The outside air drawn in must me cooled and that will require more run time of the compressor, and depending on the condition of the outside air [extremely humid as well as hot] your A/C may not be able to handle the load and cool the interior as low as if outside air were not drawn in.

However, IF the interior air becomes stale and odor laden you still may need to occasionally bring in some fresh air.

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