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5-2 Simulation Discussion

5-2 Simulation Discussion

Q • Imagine you own your own business. Based on what you learned from the simulation, what factors would determine your entry and exit into a market? • Applying the concept of marginal costs, how would you, as a business owner, decide how much to produce? • How does the impact of fixed costs change production decisions in the short run and in the long run? Refer to the average total-cost (ATC) model included in the textbook to demonstrate.

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Based on the simulation being derived, there are always some of the factors which help in determining the entry and exit into a market. Some of the example for entry which is faced by any new firm can be stated in the following manner. The firm faces the dilemma of where to source some of its raw inputs at the prevailing competitive prices. They also emphasise on