Production costs & revenue

This is a working-with-numbers lesson, so keep a pen ready. We learn the four kinds of cost — fixed, variable, total and average — and see that some costs never change while others rise with every extra unit made. We meet revenue too: total revenue is price times quantity, and average revenue is just the price per unit. We build a small cost-and-revenue table for a Namibian bakery, work out profit line by line, and watch what happens to average cost as output grows. Finally we see how new technology can lower costs but comes with a big price tag to buy.