The questions involve you interpreting the model output within your answers.

In this case, the model output consists of the following indicators;

• Break-even point (Q)
• Margin of safety (Q)
• Profit (£)
• Profit per mile (£)
• Contribution (£)
• Total costs (£)
• Total fixed costs (£)
• Total variable costs (£)
• Total revenue (£)

The break-even point is where total costs equal total revenue, the margin of safety is in terms of the quantity being produced above the break-even point, and the contribution is the amount of money left over after a sale when all direct (variable) costs have been covered.

You can use the simulation to test various theoretical expectations. For instance. if the price of the good fall then the total revenue will fall, assuming output remains the same, then the break-even point would increase (the firm would need to produce a higher output at the lower price for revenue to equal costs).

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