A perfectly competitive firm will produce at an economic loss (negative profit)in the short run rather than discontinue production if there is a rate of output at which price

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In the short run, a perfectly competitive firm will continue to produce as long as the price is greater than or equal to the average variable cost. This is because the firm can at least cover its variable costs and contribute something towards the fixed costs. If the price falls below the average variable cost, the firm should shut down and only incur its fixed costs. If the firm produces at a rate where the price is below the average total cost, it will make a loss but will still produce as long as it can cover its variable costs. Therefore, if the price exceeds the average variable cost, the firm will produce even if it incurs an economic loss.

A Perfectly Competitive Firm Will Produce at an Economic Loss