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
Evaluate the equilibrium price and quantity (a) Find the equilibrium price and quantity (b) If government in trying to control the price of the good fixes the price at c550

What is buget line how it is calculated?

The Demand Curve - The demand curve exhibits how much of a good consumers are ready to buy as the price per unit changes keeping non-price factors constant. - This price-qua

Demand and supply curve for french breads


law of diminishing marginal returns does not hold then output of the world can be produced in a flower pot. Explain?

So what caused the end of Malthusian age? How did humanity escape from the trap in that invention and ingenuity increased the numbers though not the material well-being of humanity

are most local phone companies natural monopolies?


why is choice inevitable in the understanding of economics science?