Consider the following statements when answering this question: I. As Boeing's production fell 10% to 100 planes last year, learning by doing cannot account for this year's changes in long-run average costs.
II) Failure to take into account the effects of learning by doing will lead to overestimates of the cost-output elasticity.
A) I is true, and II is false.
B) I is false, and II is true.
C) Both I and II are true.
D) Both I and II are false.

Question

Quizplus · Accepted Answer

Statement I implies that learning by doing is not a factor in the changes in long-run average costs, while statement II argues that not considering learning by doing can result in overestimating cost-output elasticity. These two statements do not contradict each other, and there is no reason to believe that learning by doing was not a factor in the 10% decrease in Boeing's production. Thus, statement I is false, and statement II is true.

Consider the Following Statements When Answering This Question: I