Short-run average profits or losses are determined by comparing total costs with at the profit-maximizing rate of output. The perfectly competitive firm's price equals the firm's minimum average total cost, and price equals the firm's minimum average variable cost. The firm will continue production at a price that average variable costs because revenues exceed total costs of producing. At the break-even price, the firm is making economic profits. The firm's short-run supply curve is the portion of its cost curve at and above its minimum average cost