The shut down price and the break even price are two points on a graph for a firm where they will be forced to shut down buisness and make no profit or losses, respectively.

Shut Down priceEdit

On the graph of a perfectly competitive market, the shut down price occurs when the profit-maximization point(where MC=MR) is just below the Average Variable Costs line. Unable to even keep up with costs that could dramatically increase, the rational firm will shut down.

Break Even PriceEdit

On the graph of a perfectly competitive market, the break even price occurs where the profit-maximization point is on the line of Average Total Costs.

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