What is your best estimate of average variable cost

Reference no: EM131248626

Suppose that the experience curve for the production of a certain type of semiconductor has a slope of 80 percent. Suppose over a five-year period that cumulative production experience increases by a factor of 8. Input prices over this period did not change. At the beginning of the period, average variable cost was $10 per unit. Assume that average variable cost is independent of the level of output at any particular point in time. What is your best estimate of average variable cost at the end of this five-year period?

Reference no: EM131248626

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