The cost reductions that firms derive from moving down their experience curves are mainly the result of learning which increases the productivity of labor.

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The experience curve is a graphical representation of the relationship between unit costs and cumulative output, and it shows that as cumulative output doubles, unit costs decrease by a certain percentage. This reduction in costs is mainly due to learning, which increases the productivity of labor through improvements in technology, production methods, and organizational efficiency. Therefore, firms that move down their experience curves can derive significant cost reductions from learning.

The Cost Reductions That Firms Derive from Moving Down Their