During short-run losses, a firm in a perfectly competitive market will continue to produce as long as:

In the short run, a firm in a perfectly competitive market will continue to produce as long as it can cover its average variable costs. This is because the firm aims to minimize losses in the short term. By continuing to operate, the firm can contribute to covering some of its fixed costs, while at least covering its variable costs associated with production.

If the revenue from sales is sufficient to cover average variable costs, the firm can still contribute to its fixed costs and potentially improve its situation. If a firm were to shut down, it would incur total losses equal to its fixed costs. However, by producing, it can minimize those losses as long as the price it receives for its product is greater than or equal to these average variable costs.

In contrast, if the firm cannot cover its average variable costs, it would be better off shutting down in the short run, as it would incur fewer losses than by continuing to operate. This dynamic illustrates the importance of variable costs in decision-making for firms facing short-run losses in perfectly competitive markets.