A Defense Contractor Has Just Started Producing Turbines for a New

question 103

Multiple Choice

A defense contractor has just started producing turbines for a new government contract. The first turbine took 7000 hours to produce. If the learning curve is 90%, how long will it take to produce the 10th turbine? (Use at least three decimals in the exponent if you use the formula approach.)

• A) less than 4800 hours
• B) from 4800 to 4900 hours
• C) from 4900 to 5000 hours
• D) from 5000 to 5100 hours
• E) over 5100 hours

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Definitions:

Marginal Product

This measures the additional output that is produced by adding one more unit of a specific input, keeping all other inputs constant.

Total Output

The entire quantity of goods or services produced by an individual, firm, industry, or economy within a specified period.

Implicit Costs

Costs that represent the value of resources used in production for which no direct payment is made.

Explicit Costs

Direct, out-of-pocket payments a firm makes to purchase the inputs it needs for production, such as wages, rent, and materials.