Concept Introduction:
Break-even Price:
This is the level of price when the economic profit is zero. The price is said to break-even when it is in equilibrium in the long-run. This happens when the price is equal to the lowest average total cost.
Shut-down Price:
This is the level of price when the revenue is equal to the variable cost. This happens when the price is equal to the lowest
Concept Introduction:
Break-even Price:
This is the level of price when the economic profit is zero. The price is said to break-even when it is in equilibrium in the long-run. This happens when the price is equal to the lowest average total cost.
Shut-down Price:
This is the level of price when the revenue is equal to the variable cost. This happens when the price is equal to the lowest average variable cost. When the price falls below this level, the production of goods shall shut-down.
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