In the short run,a perfectly competitive firm produces output and incurs an economic loss if:

A) P > ATC.
B) P < AVC.
C) AVC > P > ATC.
D) AVC < P < ATC.

Economic Loss

A situation where total costs exceed total revenues, leading to a negative economic profit.

AVC

Average Variable Cost, an economic metric reflecting the variable costs (such as labor and materials) per unit of output.

ATC

Average Total Cost, which is the sum of all production costs divided by the quantity of output produced, a critical factor in economic analysis of a company's efficiency.