Question

What are the sources of a learning curve for firms and why is it downward sloping?

Answer 1

The learning curve is the curve showing a graphical representation of output and the cost in a given period. It is related to repetitive work. It states that when employees do repetitive work then they'll take less time to do the work.

The learning curve is enhanced through the shared experience at the work and organizational levels. The learning curve can be improved by enhancing the Marginal Product of Labor.

The Learning curve is downward sloping because initially when worker irrespective of postion takes more time to do work and hence increases cost, but as the worker does work repetitively they decrease time to do work and hence less cost. Thats why downward sloping.