Cost curves

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

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.

Lecture handout: Cost curves*

A wonderful extension of the mechanistic principles that drive returns to scale and economies of scale can be found in Scale, by Geoffrey West (see here for a review).

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

Here’s my video on the difference between short run and long run decision making:

 

Here’s a video with a more traditional, textbook treatment of supply curves:

Finally, in this video on the UK probation service I look at different ways of measuring cost:


These resources form part of my Managerial Economics course map. You can watch the full YouTube playlist here. This page ties into Chapter 2 of ‘Economics: A Complete Guide for Business‘.

 

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