A firm operating on a 70 percent learning curve will achieve lower per-unit costs after doubling its output than a firm operating on an 80 percent learning curve will.

Question

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In an 80 percent learning curve, per-unit cost drops 20 percent every time output is doubled. The steeper 70 percent learning curve indicates a 30 percent drop every time output is doubled.

A Firm Operating on a 70 Percent Learning Curve Will