Differentiate Between an Experience Curve and the Traditional Learning Curve

question 53

Essay

Differentiate between an experience curve and the traditional learning curve.

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Definitions:

Internal Diseconomies

Increased per unit costs that occur when a firm or industry grows beyond a certain size, leading to inefficiencies.

External Diseconomies

Negative effects experienced by third parties or the general public due to the activities of a business or industry, not reflected in market costs.

Decreasing-Cost Industry

An industry where the cost per unit of output decreases as the scale of production increases is known as a decreasing-cost industry.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, allowing for the adjustment of all inputs, leading to optimal allocation of resources in the market.