In words, price must exceed variable cost per units ( that is, average variable cost). In Figure 9-4, the minimum value for average cost is assumed to be P₁.⁶ This is the shutdown this firm. For P ≥ P₁, the firm will follow the P = MC rule for profit maximization ( even though profits may still be negative if price is below short-run average cost). In this case its supply curve will its short-run marginal cost curve. For P < P₁, price does not cover the minimum average variable costs of production, and the firm will opt produce nothing. This decision is illustrated by the heavy –colored segment OP₁ in Figure 9-4. The practical importance of shutdown decision is illustrated in Application 9.4: why is Drilling for Crude oil Such a Boom Business?