A Firm Will Build 8 Units of a Product

question 12

Multiple Choice

A firm will build 8 units of a product. All costs are subject to an 85% learning curve. The first unit cost $75,000 to build. If the firm values inventory and cost of goods sold at the average cost for all units in the production run, what will be the cost to produce the second unit? Use the following values as needed to respond:
Ln(95%) / ln(2) = -0.074
Ln(90%) / ln(2) = -0.152
Ln(85%) / ln(2) = -0.234
Ln(80%) / ln(2) = -0.322
Ln(75%) / ln(2) = -0.415
Ln(70%) / ln(2) = -0.515

• A)$63,750
• B)$69,375
• C)$75,000
• D)Some other amount

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Definitions:

Aggregate Supply Curve

Represents the total quantity of goods and services that producers in an economy are willing and able to supply at a given overall price level in a given time period.

Price Level

Indicates the overall level of prices for goods and services in an economy at a specific point in time, reflecting the economy's cost of living.

Aggregate Demand

Aggregate demand for products and services within an economy at a certain uniform price point during a specified period.

Federal Budget Deficit

The financial situation when a government's expenditures exceed its revenues within a fiscal year, leading to borrowing or debt accumulation.