Your roommate is having difficulty understanding how a firm can keep operating despite losing money, earning a negative profit. How will firms respond to losing money? Perfect Competition and the Supply Curve - End of Chapter Problem Your roommate is having difficulty understanding how a firm can keep operating despite losing money, earning a ne profit. How will firms respond to losing money? a. If price is below the firm's minimum average variable cost, the firm will since it will b. If price is below the firm's minimum average total cost but above its minimum average variable cost, the firm will continue operating in the short run - , since it will be able to dWWer both its fixed costs and its variable costs continue operating indefinitely not be able to cover either its fixed costs or its variable costs shut down be able to cover both its fixed costs and its variable costs continue operating in the short run be able to cover its fixed costs and some of its variable costs be able to cover its variable costs and some of its fixed costs