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1 Dec 2021

Introduction

Both entry and exit are time consuming activities. They are not possible in a short period of time. Hence, they take place in the long run. In the long run, all the inputs are variable. The firms are flexible with respect to their production based decisions. The firms can make adjustments because the input costs can be varied and new production process can be adopted to suit the output at the minimum production cost.

Hence, entry and exit happen in the long run where the firms may decide to enter the market based on the expected profits or decide to exit the market based on the expected losses.

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