Profitability condition (minimum ATC = break-even price)

Result

P > minimum ATC

Firm profitable. Entry into industry in the long run.

P = minimum ATC

Firm breaks even. No entry into or exit from industry in the long run.

P < minimum ATC

Firm unprofitable. Exit from industry in the long run.

Production condition (minimum AVC = shut-down price)

Result

P > minimum AVC

Firm produces in the short run. If P < minimum ATC, firm covers variable cost and some but not all of fixed cost. If P > minimum ATC, firm covers all variable cost and fixed cost.

P = minimum AVC

Firm indifferent between producing in the short run or not. Just covers variable cost.

P < minimum AVC

Firm shuts down in the short run. Does not cover variable cost.