As mentioned in Chapter 7, efficiency is the math inverse or opposite of the average cost. It is important to understand this relationship because its implications are substantial!
Let’s say you pay a customer service representative $15 to handle calls. The average cost per call curve can be seen in Exhibit A.1. From this curve we start to draw inferences. For example, as she handles more calls, the calculated cost per call goes down. Note, this is costNC because you paid her $15 and that does not change with the number of calls she handles. It creates other curious scenarios as well. For instance, why don’t costs decrease at the same rate throughout the curve? The cost drops significantly between the first and second calls, but ...
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