Figure 811

Learning Curve on an Arithmetic Scale

The learning curve reflects the percentage decline in average cost as total cumulative output doubles from

Qt to 2Qt.

Qt 2Qt

Cumulative total output

Qt 2Qt

Cumulative total output

Furthermore, assume that average costs are in constant dollars, reflecting an accurate adjustment for input/price inflation and an identical basic technology being used in production. Given equal output in each period to ensure that the effects of economies of scale are not incorporated in the data, the learning or experience rate, defined as the percentage by which average cost falls as output doubles, is the following:

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