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
Much of the supply-side, fiscally conservative economic policies of Margaret Thatcher, Ronald Reagan, and even Mike Harris in Ontario were predicated on the belief that high income

using necessary and sufficient condition explain consumer surplus diagrammically and mathematically?

Facilitating Restructurings- rationale in era of globalisation: There has been some progress in the last few years in efforts to improve the framework for sovereign restructur

Private benefit and social benefit: Bridge the gab between private cost and social cost, and private benefit and social benefit.Under perfect market, there may be a divergence


give a detailed discussion on the term economics of scale as applied to economics, highting examples,limitation,and original of economics of scale.

The functions of money include; (1)  medium of exchange,  (2)  store of value, and (3)  a calculate of worth.  Due to money is acceptable as a form of payment for all commodities,

How to I calculate the break-even point per unit in dollar amount and then determine whether there will be a profit or loss? Such as if the fixed costs were $75000. The variable co


Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4