Suppose you have a production technology that can be characterized by a learning curve. Everytime you increase production by one unit, your costs decrease by $6. The first unity costs you $64 to produce. If you receive a request for proposal (RFP) on a project for four units, what is your break-even price? Suppose that if you get the contract, you estimate that you can win another project for two more units. Now what is your break-even price for those two units?
Suppose you have a production technology that can be characterized by a learning curve. Everytime you increase production by one unit, your costs…
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