A product was priced assuming an 80% learning curve. How much extra labor (in $) will be required on the 4th product if the learning curve is actually 90%? Assume that the first unit cost $100 to produce
What will be an ideal response?
With 80% learning, the 4th item costs $100(.80 )(.80 ) = $64.
With 90% learning, the 4th item costs $100(.90 )(.90 ) = $81.
The extra labor cost = $81 - $64 = $17.
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