Question

If a company is operating at a 90% learning curve, as production doubles labor decreases by what percentage?

A. 9%
B. 90%
C. 110%
D. 10%

Answer 1

A 90% learning curve indicates that each time production doubles, the labor required is reduced to 90% of what it was previously, representing a 10% reduction in labor.

Step-by-step explanation:

When dealing with the concept of a learning curve, particularly a 90% learning curve, it relates to the idea that each time the cumulative quantity of units produced doubles, the labor hours required for the next batch of units is reduced to 90% of the previous batch. To calculate the labor decrease percentage when production doubles, you subtract the new percentage (after the learning effect) from 100%. Therefore, 100% - 90% equals a 10% reduction in labor hours.

This is part of the economic understanding of productivity and efficiency gains within a production or business environment, as demonstrated by real-world examples, such as the rise in productivity in the mid-1990s. In this context, a learning curve is a graphical representation of the rate at which people learn over time and a way to predict the time or labor savings achieved as production experience increases.