Standard theories of production clearly distinguish between fixed and variable costs. Moreover, it is well understood that this distinction depends on the time horizon, with more costs being variable for longer horizons.
Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Whether or not you can draw a nice diagram of supply and demand is pretty irrelevant for professional economists and our understanding of markets, their dynamics, and equilibria.
How economics is practiced has nothing to do with how it it taught though, which is the topic here.
> The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Yes, and what's being taught is exactly the problem. Marginal cost is a red herring.
> Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
This kind of sentences is a good summary of what's wrong with teaching the concept of marginal cost: it assumes that economies of scale is a phenomenon limited to “certain circumstances”, when in reality it affects 90%+ of the economic activities and it shapes pretty much everything around us.
Thinking about marginal costs leads to missing the crucial point of any business, no matter its size or market: breaking even.
Moreover, concepts like economics of scale (with low marginal costs of producing an additional unit, as you state as an example) are well understood for certain products in certain circumstances.
The distinction between and relevance of average and marginal costs is taught in undergraduate classes.
Whether or not you can draw a nice diagram of supply and demand is pretty irrelevant for professional economists and our understanding of markets, their dynamics, and equilibria.