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Learning Curves Suppose you have a production technology that can be characterized by a learning curve. Every time you increase production by one...

Learning Curves
Suppose you have a production technology that can be characterized by a learning curve.  Every time you increase production by one unit, your costs decrease by $6.  The first unit costs you $64 to produce.  
a) If you receive a request for proposal (RFP) on a project for four units, what is your break-even price?  
b) 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?
Book:
Managerial Economics: A Problem Solving Approach
Authors: Luke M. Froeb and Brian T. McCann
ISBN-13: 978-0-324-35981-7
ISBN-10: 0-324-35981-0

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