Cost curves

aje on January 12, 2020

Case:

  • La Marmotte, January 2012
    Instructions: Complete Exhibit A and provide suggestions for the two key decisions

  • Spreadsheet.xlsx
  • Note: parts of this case rely on finding derivatives. Here is a background note:
Lecture handout: Cost curves*

Textbook Reading: Chapter 2 (Intro, Section 2.1 and 2.2, pp. 39-54)

La Marmotte was published by Sage in 2019. La Marmotte is a fictitious restaurant but based on a real business in Montalbert. You can see whether the skiing is good right now with this webcam.

Here is a video explaining the concept of the planning horizon:

A key part of this session is grasping the power of this tweet by Sam Altman:

My favourite example of the importance of having an intuitive understanding of the shape of average costs curves is this one:

Learning Objectives: Sunk cost fallacy, short term shut down condition, profit maximisation, deriving a supply curve.

Cutting edge theory: La Marmotte was published in 2019!