Cash Cost Curve

Question

What would you do when you come across a business concept in the interview? I understand the interviewer would explain to me. But this concept sounds quite counter-intuitive and I still didn't quite get it after the explanation

Answer 1

Hi there,

Thanks for solving my case! In terms of your question:

Q: What would you do when you come across a business concept in the interview? This concept sounds quite counter-intuitive and I still didn't quite get it after the explanation

If you still don’t understand the concept after they explain, the only option is that you ask again until you have the concept clear. There is no reason to go forward with the case until you understand the graph/concept, as most likely you won’t be able to solve it.

In the graph in question, the cost curve shows the capacity of the players in the market and their production costs. Given the product is a commodity, the price in the market is determined at the level of production equivalent to the demand. One of the producers will therefore sell at cost, while the others will generate a profit. I changed the name to industry cost curve as that term is more commonly used to make it more clear.

Hope that clarifies, for any other questions please let me know.

Best,

Francesco