La Marmotte

Abstract

Leonard Funk has been given full operational control of La Marmotte, a canteen restaurant in the French Alps. Based on the information provided in the case, he needs to decide whether to shut down for the summer and/or increase production during the winter.

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Resources
Exhibit A: Variable Costs (Selected Range)a

Students should complete the cost analysis table below.

Output

Costs

Revenue

Profit

Daily

VC

FC

TC

AVC

ATC

MC

MR

AR

TR

π

86

1,244

87

1,326

88

1,411

89

1,499

90

1,589

91

1,682

92

1,777

93

1,876

a. The formula for marginal cost is M C = T C Q but a valid approximation is M C = Δ T C Δ Q .

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