At a certain output level, the per-unit cost incurred by a firm to manufacture a product was $70. Once the cumulative output doubled, the cost per unit reduced to $63. All other factors remaining constant, the firm has been able to achieve a(n)

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A 90 percent learning curve indicates that per-unit cost drops 10 percent every time output is doubled. In this case, the per-unit cost is reduced by 10 percent of $70; therefore, the new per-unit cost is $63.

At a Certain Output Level, the Per-Unit Cost Incurred by a Firm