[8a] Local Business Interview Project

Learning Goals

Identify FC vs. VC for a real business and discuss SR vs. LR cost choices. Build an empirical feel for AVC, ATC, MC and link to (dis)economies of scale.

Timeline

Within each team:

1. Target list brainstorm
2. Outreach and interview (follow-up clarification by email/phone call if needed)
3. Team analysis + memo drafting

Submission

Team memo (1–2 pages) containing:

• Business profile (type, hours, capacity proxy)
• Cost classification (FC vs. VC) within a clear table
• A simple cost-output summary (AVC, ATC, MC estimates)
• “What if 20% demand increases” scenario: where do costs rise, and why?
• Scale discussion: evidence for (dis)economies and likely sources
• 2–3 sentence reflection on data uncertainties + how you handled it
• Photos

Caution

Students must follow professional and ethical guidelines:

• Do not ask for confidential numbers — ranges or qualitative descriptions are fine.
• Offer anonymity by default unless explicit permission is given.
• No recording without consent. Notes are preferred.
• If the business declines, thank them and choose another (or fallback options below).

Fallback Options (if outreach fails)

• Analyze publicly visible info (menus, price boards, posted hours), plus a short manager Q&A by phone.
• Use a campus unit (copy shop, student café) or student-run club stand as the “business.”
• As a last resort: use a fictionalized but realistic case provided by the instructor.

Interview Protocol

A. Email/Call Script (30–60 seconds)

“Hello, my name is [Name], a student at [University]. For an Intro to Microeconomics class project, our team is learning how local businesses manage costs. We’d love to ask a few non-confidential questions (15–20 minutes). We don’t need exact numbers—ranges or general descriptions are great, and we will keep your business anonymous unless you prefer to be named. Could we stop by at an off-peak time this week? Thank you!”

B. Core Questions

Business context

1. What are your peak vs. off-peak times or days?
2. What’s your approximate capacity constraint (e.g., seats, orders/hour, machines)?

Cost classification

1. Which costs feel fixed month to month (e.g., rent, basic salaries, insurance, licenses, equipment leases)?
2. Which costs scale with volume (e.g., ingredients, packaging, hourly labor, utilities that rise with production)?
3. When demand spikes, what bottlenecks appear first (space, staff, ovens, machines)?

Short run vs. long run

1. If demand rose 20% for a month, how would you handle it now (overtime, extra shifts, turn customers away)?
2. If that higher demand persisted for a year, what would you invest in (more equipment, bigger space)?
3. Are there scale advantages (bulk purchasing, learning curve) or scale disadvantages (coordination, congestion)?

Pricing & cost pass-through (optional)

1. Have input costs (e.g., coffee beans, utilities) changed recently? Did you adjust prices or absorb the change?
2. What are the top 2 cost risks you watch most closely?

Tip: Ask for ranges (“roughly 40–60% of costs are ingredients?”) or ordinal answers (“which cost is largest?”).

Data Tables to Be Built

Team: ____ Business (anonymous): ____ Interview date: ____

Part A. Quick Profile

Business type & hours: __________
Capacity proxy (e.g., orders/hour; machines): ___
Peak vs. off-peak times: _____________

Part B. Cost Classification

Part C. Cost–Output Summary (your estimates)

Choose an output unit: Q = __ per day.

Note: It’s fine to use ranges (e.g., VC ≈ $80–$100 at Q=60). Mark any kinks where an extra worker/oven is needed.

Part D. +20% Demand Scenario

• Short run (1 month): what changes first? ______
• Long run (1 year): what investments/adjustments? __
• ATC likely: ↓ economies / ↑ diseconomies — explain: __

Part E. Two-sentence Reflection

One assumption we made: __.
How it could bias our results: ____.