4 If a firm is

(a) covering its average variable cost and

(b) anticipates that the "below average total cost" price will be temporary, it may operate in the short run even though it is experiencing a loss. However, even if it anticipates more favorable market conditions in the future, loss minimization will require the firm to shut down (temporarily cease operation) if it is unable to cover its average variable cost. If the firm does not anticipate that it will be able to cover its average total cost even in the long run, loss minimization will require that it immediately go out of business.