A Company's Production Process Has an 80 Percent Learning Curve

question 35

Multiple Choice

A company's production process has an 80 percent learning curve rate.The process has produced 1,000 units to date.A process refinement is estimated to allow a future learning curve rate for the identical product of 75 percent.However,the initial unit made using the new process will take the same amount of time as the initial unit produced using the old process.At what point,using the new process,will the production rate exceed the production rate achieved by the old process?

• A)By the 50^th unit
• B)By the 80^th unit
• C)By the 100^th unit
• D)By the 120^th unit
• E)By the 250^th unit

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Definitions:

Healthy Profitability

Healthy profitability indicates a robust and sustainable level of earnings for a business, suggesting it is well-positioned for growth and stability.

Mezzanine Capital

is a form of financing that is a mix between equity and debt, often taking the form of convertible debt or subordinate debt, used by companies for expansion.

Bridge Capital

Temporary financing used to "bridge" the gap until longer-term funding can be arranged or until an anticipated event occurs, like a business sale.

Development Stage

A phase in a company's lifecycle focusing on developing its products, services, or business model, often requiring significant investment and carrying high risk.