Dynamic changes in costs: the learning curve, Microeconomics

Assignment Help:

Dynamic Changes in Costs: The Learning Curve

*  The learning curve measures impact of worker's experience on costs of production.

*  It describes relationship between a firm's cumulative output and amount of inputs required to produce a unit of output.

455_learning curve.png

2485_learning curve1.png

* If N=1

- L equals A + B and this measures labor input to produce the first unit of output

-   If β = 0

- Labor input remains constant as the cumulative level of output increases, cause there is no learning.

* If β > 0 and N increases

- L approaches A, and A represent minimum labor input unit of output after all learning has taken place.

-   The larger β:

- The more important becomes the learning effect.

404_learning curve2.png

* Observations

  1) New firms can experience learning curve and not economies of scale.

 2) Older firms have small gains from learning.

Economies of Scale Versus Learning

1650_learning curve3.png

* The learning curve implies:

 1) The requirement of labor falls per unit.

 2) Costs will be high at 1st and then will fall with learning.

 3) After eight years the labor requirement will be 0.51 and per unit cost will be ½ what it was in the 1st year of production? 

653_learning curve4.png


Related Discussions:- Dynamic changes in costs: the learning curve

Explain about the deadweight loss and elasticities, Explain about the deadw...

Explain about the deadweight loss and elasticities. Deadweight Loss and Elasticities: The common rule for economic policy is the other things equal; you need to select the p

Revenue, draw the supernormal curve

draw the supernormal curve

Elasticity, How do you draw the demand curve Q = 100 - 50P and indicate whi...

How do you draw the demand curve Q = 100 - 50P and indicate which portion of the curve is elastic, which is enelastic, and which is unit elastic?

Determine the setting a minimum wage for under-eighteen, Show the possible ...

Show the possible outcome of setting a minimum wage for under-eighteens. Explaining and illustration of minimum wage - clearly set above market equilibrium outlining res

Interest rate dertemination, to what extent are interest rates determined b...

to what extent are interest rates determined by the economic theory

#theory of consumer., Ask question #what is an indifference curveMinimum 10...

Ask question #what is an indifference curveMinimum 100 words accepted#

Distinguish between fiscal and monetary policy, Problem: (a) Distingui...

Problem: (a) Distinguish between fiscal and monetary policy, giving examples where appropriate. (b) Explain how fiscal and monetary policies might be used by a government

Microeconomic analysis, what is the relevance of microeconomic analysis in ...

what is the relevance of microeconomic analysis in contemporary Nigerian economy

Cardinal utility, what is cardinal utility. Please give an example

what is cardinal utility. Please give an example

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd