When we are selling something, we evaluate market prices by comparing them to some reference price that we have in mind. This comparison gives us an idea of whether a certain price is “good” or “bad”. For example, if I am a corn producer and had a chance to sell corn for 4.20/buafewmonthsagoandnowIcansellitonlyfor3.50/bu, it might feel like the current price is “bad” because I am comparing it with a higher price that would have allowed me to make more money. On the other hand, if my break-even price is $3.40/bu, then it might feel like the current price is “good” because I can still make a profit by selling above my break-even level