A company can produce a small lot of products the first time at a cost of $3,000. If their 65 percent learning curve allows them to reduce their costs on each lot, what is the cost of producing the 12^th lot? A) $14,340 B) $3,000 C) $2,896 D) $640.50 E) $213.50

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Quizplus · Accepted Answer

The learning curve effect means costs decrease by a consistent percentage with each doubling of production. The cost of the 12th lot can be calculated using the formula: Cost of nth lot = Initial cost * (n^log(learning rate)/log(2)). For the 12th lot, this results in $640.50.

A Company Can Produce a Small Lot of Products the First