Learning curve and production cost

A learning-curve cost estimate applies an explicit learning model to forecast how experience may change production cost. In a cumulative-average model, average labour time per unit falls to a stated proportion when cumulative production doubles; a stable hourly labour rate converts the time estimate to labour cost. The result does not imply that every cost falls at the same rate or that the lowest average cost is the profit-maximising output. Changes in technology, labour rates, product design and a learning plateau can limit the forecast.