In a perfectly competitive market, a firm experiencing economic losses will always exit the market in the short run, as it cannot cover its average total costs.

In a perfectly competitive market, firms aim to make a profit, but sometimes they face economic losses when their costs are higher than the money they earn from selling their products. If a firm cannot cover its average total costs, it means it is losing money on each unit sold. However, in the short run, a firm might choose to stay in the market if it can still cover its variable costs, hoping that conditions will improve. For example, if a bakery has high fixed costs but can still pay for ingredients and labor, it might stay open for now, even if it's not making a profit. Ultimately, if losses continue and the firm cannot cover its costs, it will likely exit the market in the long run to avoid further financial hardship.