As a result of learning curve, ________.
A) unit costs increase as productivity increases and the unit-cost function behaves nonlinearly
B) unit costs decrease as productivity increases and the unit-cost function behaves nonlinearly
C) unit costs increase as productivity increases and the unit-cost function behaves linearly
D) unit costs decrease as productivity increases and the unit-cost function behaves linearly

Question

Quizplus · Accepted Answer

Learning curve theory states that as more units of a product are produced, the cumulative average time to produce each unit decreases, resulting in increased productivity and lower unit costs. This relationship is nonlinear because the rate of improvement slows down as production levels increase. Therefore, as productivity increases, unit costs decrease, and the unit-cost function behaves nonlinearly.

As a Result of Learning Curve, ________