Learning curve in practice, Microeconomics

Learning Curve in Practice

* Scenario

- A new firm enters chemical processing industry.

* Do they:

1) Produce a low level output and sell at high price?

2) Produce a high level output and sell at low price?

* How would learning curve influence your decision?

* The Empirical Findings

- The study of thirty seven chemical products

- Average cost fell 5.5 percent per year

- For each doubling of plant size, the average production costs fall by 11 percent

- For each doubling of cumulative output, average cost of production falls by 27 percent

* Which is more significant, economies of scale or learning effects?

* Other Empirical Findings

- In semi conductor industry a study of 7 generations of DRAM semiconductors from 1974-1992 found learning rates averaged 20 percent.

- In aircraft industry learning rates are as high as 40percent.

* Applying Learning Curves
1) To determine if it is profitable to enter in the industry.

 2) To determine when profits will occur based on plant size and cumulative output. 

Posted Date: 10/12/2012 4:07:29 AM | Location : United States







Related Discussions:- Learning curve in practice, Assignment Help, Ask Question on Learning curve in practice, Get Answer, Expert's Help, Learning curve in practice Discussions

Write discussion on Learning curve in practice
Your posts are moderated
Related Questions
Variable and Total cost curve    * Consequently (from the table which is given): - MC initially decreases with increasing returns  0 through 4 units of output

What is the difference between wages and salaries

Illustrate about the imposition of behavior assumptions in analytical frameworks of modern economics? Imposition of Behavior Assumptions: The second one step for studying

1. Sam Smith owns an internet radio company that has subscribers in Houston and Dallas. The demand functions for the 2 markets are: Q(Houston) = 50-0.35P(Dallas) Q(Dallas) = 80-0.

Current Account Deficit (CAD): Boon or Bane The general belief is that high CADs are dangerous. In general, this is correct. But the converse that low CADs are good is not. A

Raise or Lower Tuition? Suppose that, in an attempt to raise more revenue, Nobody State University increases its tuition. Assess a raise in tuition and if it will necessarily res

when does market equilibrium occur?


Q. Describe Labour Market Segmentation? Labour Market Segmentation: Deep and systematic differences among various groups of workers, in which different types of workers are eff

equation for a demand curve is p=2/q. what is the elasticity of demand if price falls from 5 to 4