The price at which a firm is indifferent between producing and shutting down is called the

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The price at which a firm is indifferent between producing and shutting down is called the shutdown price. At or below this price, the firm would choose to shut down production as it would not be earning enough to cover its variable costs of production. Above this price, the firm can continue producing and earning a profit. Therefore, knowing the shutdown price is important for a firm to make production decisions in the short run.

The Price at Which a Firm Is Indifferent Between Producing