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Question: manufacturing costs as a manufacturer produces more units of some...

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Manufacturing Costs As a manufacturer produces more units of some product, the cost to produce each unit should decrease as the worker skills and workflow improve. This decine in cost-per-unit is called an experience curve or learning curve. One model of a learning curve is the าnit learning curve model, which we will explore here. The unit learning curve model assumes that each time the number of units to be produced doubles, say from n to 2n, the cost to produce the 2nth unit is some fraction of the cost to produce the nth unit. This fraction, r, is usually expressed as a percent. For example, suppose there is a 90% learning curve and let C(x) be the cost to produce the rth unit. Then: C(2n) 0.90C(n). It tums out that with a learning curve of r the cost to produce the rth unit is 1. Use algebra to verify that C(2n)-rC(n) no matter what n ¡s, 2. Suppose the cost to produce 1 telephone switchboard is $271,000 and there is a leaming curve of 90%. Calculate lim C(r); what does your answer mean in terms of the model? Does that seem reasonable? Why or why not? 3. Suppose the learning curve for some product is greater than 100% Calculate lin C(r) n that case; what does your answer mean in terms of the model? Does that seem reasonable? Why or why not? Write your solutions on your own paper you do not need to print out or attach this page. Hint remember that lg(b)- 2
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