Suppose that a firm's learning curve-that is, the relationship between its average cost, (A C), and cumulative

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Suppose that a firm's learning curve-that is, the relationship between its average cost, \(A C\), and cumulative output, \(Q\)-is \(A C=10+2 Q^{a}\), where \(a \leq 0\). If \(a=0\) and cumulative output increases from 1 to 2,000 units, what can you say about average cost and the firm's ability to learn by doing? Would your answer change if \(a=-0.5\) ?

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Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

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