5 marks iv opportunity cost versus out of pocket cost

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Unformatted text preview: te your reasons. [5 marks] c) You overheard somebody said: “I think our company should take advantage of economies of scale by increasing our output, thereby spreading out our overhead costs.” Would you agree with this statement (assuming this person is not your boss)? Explain. [5 marks] [TOTAL : 20 MARKS] 10 BMME5103/SEPT 07-F/KN Question 3 a) Explain the importance of free entry and exit in the perfectly competitive market. If free entry and exit do not exist, what impact would this have on the allocation of resources and on the ability of firms to earn above-normal profits over time? [5 marks] b) “The perfectly competitive model is not very useful for managers because very few markets in the Malaysian economy are perfectly competitive.” Do you agree with this statement? Why? What lessons can managers learn by studying perfectly competitive markets? [5 marks] c) Explain why the demand curve facing a perfectly competitive firm is assu...
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This document was uploaded on 02/09/2014.

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