Lesson Plan

• Describe the distinction between short‑run and long‑run production horizons.
• Calculate and interpret total, average and marginal cost formulas.
• Sketch and label short‑run cost curves (AFC, AVC, ATC, MC) and the long‑run average cost curve.
• Explain internal and external economies and diseconomies of scale and their impact on LRAC.
• Apply shutdown and long‑run equilibrium conditions to profit‑maximising decisions.

• Projector and screen
• Whiteboard and markers
• Printed worksheets with cost‑curve diagrams
• Calculators
• Graph paper
• Student laptops or tablets (optional for interactive graphing)

Begin with a quick poll: “What costs do you think a firm can’t change in the short‑run?” Use the responses to link prior knowledge of fixed vs variable costs. Explain that today’s success criteria are to correctly identify short‑run vs long‑run cost concepts, draw the key curves, and apply shutdown and equilibrium rules.

1. Do‑Now (5’): Students complete a short worksheet matching cost terms to definitions.
2. Mini‑lecture (10’): Review short‑run vs long‑run horizons and introduce the cost formulas (TC, AFC, AVC, ATC, MC, LRAC, LRMC).
3. Guided Practice (12’): Using the projector, sketch SR cost curves step‑by‑step, highlighting where MC intersects AVC and ATC.
4. Group Activity (15’): In pairs, students draw the LRAC envelope from several SR ATC curves on graph paper and annotate economies/diseconomies of scale.
5. Check for Understanding (8’): Quick quiz via Kahoot or hand‑raise: identify the shutdown condition and long‑run equilibrium condition.
6. Wrap‑Up Discussion (5’): Summarise key take‑aways and address any lingering misconceptions.

Recap the main differences between short‑run and long‑run costs and the shapes of their curves. Ask students to write one exit‑ticket response: “When should a firm shut down in the short‑run and why?” Assign homework to complete a worksheet that requires calculating costs from given data and sketching both SR and LR curves.