For a perfectly competitive firm that should continue to operate in the short run, loss is minimized where

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In the short run, a perfectly competitive firm should continue to operate as long as the price is greater than the average variable cost. This means that the firm is able to cover its variable costs and some portion of its fixed costs. In order to minimize losses, the firm should produce at the output level where marginal revenue equals marginal cost. This is because at this output level, the firm is producing the amount of output where the revenue earned from selling an additional unit is exactly equal to the cost of producing that additional unit. Thus, producing any more or less would result in a greater loss.

For a Perfectly Competitive Firm That Should Continue to Operate